Macro

Oil-rich Alberta lifts levy on carbon output, ups target for cuts

Oil-rich Alberta will raise the cost of greenhouse-gas emissions for large industrial plants and boost targets for emission cuts as its new government took action on Thursday to strengthen the Canadian province's environmental reputation.

Alberta is the largest source of U.S. oil imports, but its oil sands are Canada's fastest-growing source of carbon emissions and the province has faced harsh international criticism for what has been perceived as lax oversight of the oil sands industry.

Environmental groups have used Alberta's record of rising emissions in their efforts to block TransCanada Corp's controversial Keystone XL pipeline as well as other projects.

The left-leaning New Democratic Party government said it will boost the cost of excess carbon output to C$20 ($16.26) per tonne at the start of 2016 from the current C$15, and will raise it to C$30 per tonne for 2017. Its target for carbon-emissions cuts will climb to 15 percent of normal emissions in 2016 from 12 percent, rising to 20 percent in 2017.

Environment Minister Shannon Phillips said the new targets will burnish Alberta's reputation.

"If we get it right, our environmental policy will make us world leaders on this issue instead of giving us a black eye around the world," Phillips told a news conference.

The Canadian Association of Petroleum Producers (CAPP) said oil sands producers will meet the new targets. But he said they worry that combined with recent tax increases, costs are rising even before the government launches a promised review of oil royalties.

"The revised rules ... and Alberta's recently announced corporate tax increase have the potential to add almost C$800 million to industry costs over the next two years," CAPP said in a statement.

The new rules extend Alberta's current climate-change regime, which was set to expire at month's end, spurring the government to prolong it to the end of 2017.

Phillips appointed an expert panel to draft new rules on greenhouse gas reductions to take effect after 2017. The panel is expected to release a preliminary proposal ahead of a key United Nations climate change conference in Paris in December.

The new measures were welcomed by environmental groups, which have demanded tougher rules from the province.

"Today's news sends an important signal both inside and outside Alberta, and is a solid set of first steps," Dan Woynillowicz, director of policy for Clean Energy Canada, said in a statement.

Personal Spending Surges Most Since August 2009 As Savings Rate Tumbles

After 6 straight months of decline in annual spending growth, May saw YoY spending pop 3.6% (the most since Dec 2014).

After an unchanged April, May expectations for spending were a 0.7% jump but the data blew that away, printing a 0.9% MoM jump - the biggest since August 2009 and biggest beat since Jan 2013.

Personal Income only grew at 0.5% (still the highest MoM jump since March 2014) driving the savings rate down to 5.1% - the lowest since December. Before Steve Liesman and his buddies get too excited - spending was driven mainly by a 4.72% surge in spending on Energy goods & services - not exactly what the discretionary buying consumer-oriented society that is required to keep the dream alive was looking for.

Attached Files

CITIC to invest $113 billion for "Silk Road" investments

China's CITIC Ltd., the state-owned conglomerate, said on Wednesday that its banking, securities, trust and construction divisions will jointly invest more than 700 billion yuan ($112.79 billion) to support China's "One Belt, One Road" initiative.

The investments will involve about 300 projects extending from Singapore to Turkmenistan.

Under its so-called "One Belt, One Road" initiative, China aims to create a modern trade route known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Projects under the plan include a network of railways, highways, oil and gas pipelines, power grids, Internet networks, maritime and other infrastructure links across central, west and south Asia to as far as Greece, Russia and Oman, increasing China's connections to Europe and Africa.

China's President Xi Jinping said in March that he hoped China's annual trade with the countries involved in the "One Belt, One Road" initiative would surpass $2.5 trillion in a decade.

China CITIC Bank Corp , with more than four trillion yuan in assets, will provide more than 400 billion yuan in financing to more than 200 projects in areas such as infrastructure, energy, agriculture and culture through its local branches, the bank said.

The bank will also establish and manage a "One Belt, One Road" fund, with 20 billion yuan in its first phase, to participate in mergers and acquisitions, public-private partnerships and financing Chinese companies to expand overseas.

CITIC Bank expects to increase the fund to 100 billion yuan within five years to finance projects in the region, CITIC Bank Vice Governor Sun Deshun told reporters at a press conference.

CITIC's other subsidiaries, including CITIC Securities Co , CITIC Trust Co, CITIC Construction Co, CITIC Heavy Industries Co, and CITIC Resources Holdings Ltd, will invest nearly 300 billion yuan in about 100 projects in more than 10 countries along the "One Belt, One Road" route, which also includes Laos, Mongolia, and Kazakhstan.

CITIC subsidiaries will provide 110 billion yuan in equity financing and debt financing to more than 30 companies with businesses related to China's global initiative.

Thai PTT joins Ratchaburi for coal plants, Myanmar LNG

Thailand's largest energy firm PTT Pcl said it signed contracts with Ratchaburi Electricity Generating Pcl to jointly invest in a liquefied natural gas (LNG) terminal in Myanmar and power plants in Southeast Asia.

The move is part of state-controlled PTT's drive to strengthen energy security in Thailand, which uses natural gas for 70 percent of power generation. About a fifth of that is piped from Myanmar.

Thailand is under pressure to secure long-term energy supply as its own gas is expected to run out over the next six to seven years. Import from Myanmar is likely to fall as Thailand's neighbour is expected to use more of its resources for its own development.

Under the contract signed with Ratchaburi, PTT planned to develop a floating storage and re-gasification unit (FSRU) to store LNG in Myanmar, Pongdith Potchana, chief executive of Ratchaburi told reporters.

The FSRU will have capacity of 3 million tonnes in the first phase with estimated investment of $400 million, he said adding Ratchaburi will own about 25-30 percent in the project, while the remaining stake will be held by PTT and a domestic partner.

PTT's two units, PTT Energy Resources Ltd and Global Power Synergy Pcl, also signed a separate contracts with Ratchaburi to study the possibility of investing in coal-fired power plants in Myanmar, Indonesia and Vietnam, the companies said in a joint statement.

PTT Energy and Ratchaburi will jointly invest in a 600-megawat (MW) coal-fired power plant in Kyaing Tong, Myanmar, with estimated cost of $1.3 billion, and about 500 MW of electricity will be exported to Thailand, Pongdith said.

In Vietnam, Global Power and Ratchaburi planned to invest in a 500-MW power plant to be located near a petrochemical complex PTT has already planned, while the two companies also aim to jointly bid to buy a $150 million, 300 MW power plant in Indonesia, he said.

The most important chart around.

But I am knowledgeable concerning markets and believe Donald is completely correct to be concerned that we have “a big fat bubble coming up. We have artificially induced low interest rates.”

I personally believe we are sailing in dangerous unchartered waters. I can only hope we get to shore safely. Never in the history of the Federal Reserve have interest rates been artificially held down for so long at the extremely low rates existing today. I applaud Donald for speaking out on this issue – more people should.”

-Icahn, quietly refusing Trump's offer of treasury secretary nominee.

Attached Files

Brazil's biggest corruption investigation could spread to its biggest electric utility, Eletrobras, and more than a dozen foreign companies, a lead prosecutor said on Tuesday, in a sign of further turbulence for the country's business and political establishment.

Carlos Fernando dos Santos Lima said a scheme similar to one set up as state-run oil firm Petrobras may have operated at Eletrobras, specifically on major projects like nuclear reactor Angra 3 and the $13 billion Belo Monte hydroelectric dam in the Amazon.

In a wide-ranging interview, the Cornell University educated prosecutor said "there are many charges still to come," in a probe he said was likely to continue for at least another two years.

The groundbreaking inquiry has already ensnared dozens of senior executives, battered the popularity of President Dilma Rousseff and rattled the fragile Brazilian economy.

The 16-month old investigation has also turned up evidence of corruption by more than a dozen foreign firms, including South Korea's Samsung Heavy Industries Co Ltd, Swedish builder Skanska AB, Danish oil and shipping group Maersk and British engineer Rolls-Royce Holdings, Lima said.

By investigating another state-controlled company and including so many foreign Petrobras suppliers, the prosecutors have significantly extended the scope of an investigation that claimed one of its biggest scalps yet with the arrest of the chief executive at Brazil's biggest construction and engineering conglomerate Odebrecht SA.

Lima has said he has no doubt that Odebrecht and rival construction company Andrade Gutierrez led a "cartel" that overcharged Petrobras for work and passed on the excess to executives and politicians.

Odebrecht denies participating in a cartel and has called the arrests illegal. Prosecutors must present charges within 30 days of arrest.

No let-up seen in Santiago's driest June in 50 years

The Chilean capital of Santiago has experienced the driest June in half a century, leading to headache-inducing levels of pollution and Andean ski slopes bereft of snow, with no rain clouds on the horizon, meteorologists say.

There has been zero precipitation in the month to date in Santiago - the first time that has happened in fifty years.

The unusually dry conditions in the midst of the Southern Hemisphere winter have exacerbated the city's already-high pollution levels, leading the government to declare an "emergency" on Monday, banning many vehicles and forcing some businesses to close.

Santiago sits in a topographical bowl, making it susceptible to pollution caused by factories, cars, fires and wood-burning stoves, particularly in winter. Normally rain clears the air at regular intervals, but the arid June has left city-dwellers gasping for breath.

No relief from the arid conditions is expected in the week ahead.

"We can say that no rain is expected for the next seven days," Janette Calderon, a meteorologist with the country's official meteorological office said on Tuesday.

The dry month compounds a drought that has been going on for some eight years, weighing on industries from mining to wine producers.

Just under 12 millimeters of rain has fallen since the start of the year, compared to an average for the first six months of the year of over 100 millimeters, said Calderon.

That makes the first half of 2015 the driest half year since records began in 1966.

Andean ski resorts near the city, popular with tourists and locals alike, would normally be opening in the next few weeks, but are practically bone dry.

On Monday, the emergency meant subways were crowded as drivers left cars at home and businesses running stoves such as bakers were forced to shut.

Miner Anglo American PLC said it did not operate a molybdenum drier for its Los Bronces plant on Monday due to the shutdown, but that the halt would not impact production.

The government downgraded its pollution alert on Tuesday, which eases some of the restrictions on cars and businesses.

Container Shipping Rates from China to US, Europe Collapse

“Sluggish westbound volumes have brought about the worst spot market rate collapse that this trade has experienced.” That’s how Drewry Maritime Research summarized it in a report a couple of weeks ago. Since then, the collapse of the rates for shipping containers from China to the West has gotten worse with clockwork relentlessness.

In mid-April, there had already been a lot of handwringing. The Shanghai Containerized Freight Index (SCFI) tracks spot rates of shipping containers from Shanghai to 15 major destinations around the world. At the time, rates from Shanghai to Rotterdam had plunged to $399 per twenty-foot container equivalent unit (TEU), down 67% from a year earlier, the lowest rate ever, and half of what was considered the break-even rate for these routes.

It seemed that there would have to be some kind of uptick – that efforts by carriers to impose higher rates would stick. But nothing worked. So a week ago, there was a lot of handwringing because rates to Rotterdam had dropped to $243 per TEU, which wouldn’t even cover the cost of fuel of about $300 per TEU.

But now, in the week ended June 19, the spot rates from Shanghai to Rotterdam plunged another 15.6% to $205, a previously unimaginable low.

And it’s not just to Northern Europe.

On the routes from Shanghai to the US West Coast, carriers also tried to implement rate increases effective April 1. But after an ephemeral uptick of $300 to $1,932 per forty-foot container equivalent unit (FEU), spot rates re-swooned. By the beginning of May, the index had dropped to $1,783, about back where they had been a year earlier.

But look what has happened since. Last week the index plunged 5.4% to $1,268 per FEU, down 29% from the battered rates at the beginning of May.

Spot rates to the US East Coast are also getting beat up: down 3.3% last week. Of the 15 destinations in the index, rates dropped for 11, remained flat for Taiwan and Hong Kong, and rose for Korea and East Japan.

The overall SCFIdropped 4.3% for the week to its lowest level ever: 556.72. It’s now 44% below where it was during the Financial Crisis, on October 16, 2009, when it was set at 1,000, and down about 50% from February. This is what the terrible plunge looks like:

Chinese shipyards' new orders slump 77.4pct YoY - CANSI

China Association of the National Shipbuilding Industry said that Chinese shipyards' new orders slumped 77.4% YoY to 7.86 million dwt in the first five months of 2015.

The orderbook of Chinese shipbuilders fell 8.2% YoY to 138.18 million dwt at the end of May, down 7.5% from the level at the end of 2014.

The plunge in new orders came after Chinese shipbuilders ended 2014 with a 14.2% YoY fall in awarded orders, as buyers cut back on spending on new ships since late 2014.

The completed tonnage at the Chinese yards grew 18.9% YoY to 15.48 million dwt during the same period.

For exports, the new orders also fell 79.8% YoY to 6.65 million dwt, accounting for 84.6% of overall new orders placed at Chinese shipyards.

A total of 88 companies in the Chinese shipbuilding and relevant industries surveyed by CANSI posted YoY rise in operating revenues of 4.4% to CNY 102.0 billion, with gross profits up 17% to CNY 2.06 billion.

The industrial output values of these companies increased 5.5% YoY to CNY 163 billion, with those for shipbuilders and marine equipment makers up 9.2% and 9.6%, respectively. However, the industrial output values for ship repairers were down 8.3% YoY.

Economic Strength: San Diego

San Diego County's economy is continuing its strong start to 2015, a report released Thursday by the University of San Diego says.

The university's index of leading economic indicators measures six factors related to the region's growth, including the labor market, building permits, stock prices and consumer confidence. All six of the economic factors were positive in April, the third time this year that has been the case.

"This shows that the economy is going to be strong for the rest of 2015 and into 2016," said University of San Diego economist Alan Gin.

The index, a composite of those measures, rose 0.9 percent from March to 138.9 in April. It's now approaching its record 144.2 set in March 2006. The monthly measure bottomed out at 100.7 in March 2009.

Sixth mass extinction 144x greater than any previous event.

The world is embarking on its sixth mass extinction with animals disappearing about 100 times faster than they used to, scientists warned Friday, and humans could be among the first victims.

Not since the age of the dinosaurs ended 66 million years ago has the planet been losing species at this rapid a rate, said a study led by experts at Stanford University, Princeton University and the University of California, Berkeley.

The study "shows without any significant doubt that we are now entering the sixth great mass extinction event," said co-author Paul Ehrlich, a Stanford University professor of biology.

And humans are likely to be among the species lost, said the study -- which its authors described as "conservative" -- published in the journal Science Advances.

"If it is allowed to continue, life would take many millions of years to recover and our species itself would likely disappear early on," said lead author Gerardo Ceballos of the Universidad Autonoma de Mexico.

The analysis is based on documented extinctions of vertebrates, or animals with internal skeletons such as frogs, reptiles and tigers, from fossil records and other historical data.

The modern rate of species loss was compared to the "natural rates of species disappearance before human activity dominated."

It can be difficult to estimate this rate, also known as the background rate, since humans don't know exactly what happened throughout the course of Earth's 4.5 billion year history.

For the study, researchers used a past extinction rate that was twice as high as widely used estimates.

If the past rate was two mammal extinctions per 10,000 species per 100 years, then the "average rate of vertebrate species loss over the last century is up to 114 times higher than it would be without human activity, even when relying on the most conservative estimates of species extinction," said the study.

"We emphasize that our calculations very likely underestimate the severity of the extinction crisis because our aim was to place a realistic lower bound on humanity's impact on biodiversity."

Li-ion: change manufacturing method not design?

Chiang and Wilder are about to embark on a third round of investment, seeking $20 million to $30 million. They would spend the money to scale up to production of a new machine that makes a cell every two to ten seconds. This machine, to be available for sale in two years, would be for stationary electric batteries—used to power businesses, neighborhoods and utilities, rather than cars.

The machine would have a capacity of 79 megawatt-hours a year and produce any kind of lithium-ion battery for a cost of about $160 per kilowatt-hour. By 2020, Chiang says, that will be down to about $85, 30% below where conventional lithium-ion batteries—whose cost is also dropping—may be by then. But most importantly, the machine would be priced at about $11 million. Hence, the startup cost of getting into lithium-ion battery manufacturing would plummet. “It’s so far out of the paradigm, you just don’t believe it,” said Wilder.

If 24M creates this machine, and if it can sell it into the market—an entirely different question—it will clearly shake up big industries, including stationary and electric car batteries, not to mention utilities. How quickly is anyone’s guess.

Chiang seems ambivalent as 24M begins to disclose what it’s been doing all these years. Until now, the entire industry has had a singular idea of how batteries are manufactured. Chiang’s own rivals were, until today, convinced that he was on a far-fetched crusade to figure out flow batteries.

But now, if they look hard at what he is really doing, and accept his approach, they may attempt to copy him. “If you haven’t seen the movie play out before, you don’t have the confidence it can be done,” he said. But staying a step ahead is also part of the startup game.

Indonesia seeks to mend fences with wary investors in resources

Now, there are signs under President Joko Widodo that the government is trying to mend fences with wary investors and entice more money back into resources.

Indonesia's resources sector contributed about 12 percent of GDP last year, or about $101 billion, but investment slipped and the ban on exporting minerals cost $6 billion in lost revenue.

The government now plans to relax parts of the ban, as well as pushing to resolve some protracted mining disputes and dealing with a backlog of expiring energy contracts that have frustrated foreign investors.

"There are still lots and lots of difficult hurdles to overcome, but we are seeing something of a change in mindset and that's good news," said mining law expert Bill Sullivan, foreign counsel at Christian Teo Purwono & Partners.

The more open approach was on show at a recent global coal conference in Bali, where Indonesia's energy and mining minister, Sudirman Said, candidly answered questions on a host of issues concerning the packed auditorium after his speech.

While supporting the plans, Widodo's government now admits there were mistakesimplementing them and is looking to push back a 2017 deadline banning copper concentrates exports and could ease its ban on bauxite exports.

The person in charge of IPOs and share offerings in China was just arrested

One of China's top stock market regulators has been arrested.

The head of the division in charge of IPOs on the Shanghai and Shenzen stock markets, Li Zhiling, is accused of violating rules and letting her husband trade stocks, according to a statement by the China Securities Regulatory Commission (CSRC).

Li has been in charge of approving IPOs on the Chinese stock market, as well as requests by companies to sell additional shares, since 2014.

“She’s suspected of breaking the law by taking advantage of her position,” said a statement by the CSRC posted on Weibo. “Once we discover such violations, we will immediately take action to punish them. We do not take this lightly.”

Shanghai managed to save energy equal to 300,000 tons of coal and cut 700,000 tons of carbon dioxide in the past year.

There were 112 new energy-saving firms registered in Shanghai last year, up 35.6 percent from 2013. This brought the total number of such firms to 427 by the end of 2014.

Industrial energy accounted for 54 percent of the city's total energy use in 2013, down from 70 percent in 2000. The proportion of coal energy in total energy use had been cut to 41 percent in 2013 from 65 percent in 2000.

Shanghai said it will offer 3 billion yuan in subsidies to promote renewable energy and new-energy cars.

Odebrecht CEO Detained by Brazil Police in Petrobras Case: Folha

The heads of two of Brazil’s largest construction companies were detained by police on Thursday as part of a broader probe into corruption at Petrobras, according to local media.

Marcelo Odebrecht and Otavio Azevedo, heads of Construtora Norberto Odebrecht and Andrade Gutierrez construction companies, respectively, were among the 12 people judges had issued detainment and arrest warrants for, according to Folha de Sao Paulo and O Globo newspapers.

Brazil’s Federal Police are investigating money laundering, embezzlement and racketeering as part of the probe.

Odebrecht said in an e-mailed statement that its offices in Sao Paulo and Rio de Janeiro had been searched and that arrest warrants had been carried out.

Andrade Gutierrez in an e-mailed statement said it was aiding in the police investigation and denied any involvement in relation to the so-called Car Wash operation, referring to investigations into a scheme of alleged kickbacks on service contracts at state-run oil company Petrobras.

It is the most senior-level detainment of corporate executives since the Petrobras scandal broke last year.

The executives will be taken to Curitiba, capital of the state of Parana, according to a Federal Police statement.

Oil and Gas

Israel's security cabinet approves gas deal with Noble, Delek

Israel's security cabinet approves gas deal with Noble, Delek

Israel's security cabinet voted on Thursday in favour of a plan that would allow a U.S.-Israeli energy group to keep control of most of the country's natural gas deposits but would also put some others up for sale.

The decision is set to end months of uncertainty and will likely to be welcomed by Texas-based Noble Energy and Israeli conglomerate Delek Group. Their control of two sizeable gas fields was put in doubt late last year after they were branded a monopoly.

Details of the agreement have yet to be made public, but industry sources have said Noble and Delek will be allowed to keep control of Leviathan, the world's largest offshore gas discovery of the past decade.

"We are establishing a significantly more competitive market and putting in place mechanisms that will prevent price gouging," Eugene Kandel, a top economic advisor to Prime Minister Benjamin Netanyahu who led negotiations with Noble and Delek, said on Army Radio.

The 10-member cabinet for security and diplomatic affairs was an unusual forum to handle a primarily economic issue, but it allowed Netanyahu greater control. After voting in favour of the proposal unanimously, the government is widely expected to approve it.

"It is of decisive importance to move quickly to develop and expand the natural gas fields that have been discovered off Israel's shores out of concern for state security and the foreign relations of the State of Israel," a cabinet statement said after the meeting ended.

The deal gives Delek subsidiaries Avner Oil and Delek Drilling six years to sell their individual 15.625 percent stakes in another large field, Tamar, while Noble will have to lower its stake in that project to 25 percent from 36 percent, industry sources said.

Delek and Noble will also be forced to sell their stakes in two smaller fields, Tanin and Karish, in up to 18 months.

Tamar, with reserves of about 10 trillion cubic feet (tcf), began production in 2013 for the domestic market. Leviathan, which holds an estimated 22 tcf, is primarily earmarked for exports and is expected take three years to bring online. Tanin and Karish have a combined 3 tcf.

Israel's energy sector was blindsided in December when the anti-trust regulator deemed Noble and Delek a monopoly and could be forced to sell off their assets.

Noble in response halted investments in Israel, the companies threatened legal action and a number of long-term, multi-billion dollar export deals to Egypt and Jordan were thrown into jeopardy.

Netanyahu quickly cobbled together a government committee to find a compromise and his intention to speed up development of the fields rather than demand a more sweeping divestment led to the resignation of the anti-trust regulator.

Oklahoma drilling regulator calls spike in quakes a "game changer"

A spike in earthquakes across Oklahoma is forcing the state's energy regulator to urgently consider tougher restrictions on drilling activity, a spokesman said, calling it a "game changer."

From June 17 to 24, there have been 35 earthquakes of magnitude 3.0 or greater in the state, according to the Oklahoma Geological Survey. Particularly worrying for regulators, some of the recent quakes occurred in the Oklahoma City metropolitan area, where there are no high-volume wastewater injection wells.

The spike in quakes comes roughly two months after new rules governing the disposal of briny wastewater from drilling took full effect. Drillers were ordered by the Oklahoma Corporation Commission (OCC), which regulates the oil and gas industry, to stop disposing wastewater below the state's deepest rock formation, believed to be one of the main causes of the quakes, and to reduce the depth of wells that already go that deep.

"We have to approach it anew," said Matt Skinner, a spokesman for the OCC. "There's been a huge increase. That's a game-changer," he said, referring to the recent jump in tremors.

Oklahoma has been grappling with a rise in seismic activity since 2009, amid an expansion of drilling activity that has doubled the state's oil output in the last seven years.

The energy boom has created jobs and contributed to state coffers, but many residents are deeply uneasy about the tremors. Oklahoma has become ground zero in the oil industry's struggle to break the connection between production and earthquakes.

It was not immediately clear why there was a spike in quakes in the last eight days. Prior to this period, quakes of magnitude 3.0 or greater typically hit Oklahoma once or twice a day, according to data from the U.S. Geological Survey (USGS). Prior to 2009, there were only one or two such quakes in the state in a year.

Scientists attribute the general rise in tremors to soaring amounts of salty wastewater being injected underground. Injected liquid volumes have doubled from about 80 million barrels per month in 1997 to about 160 million barrels per month in 2013, according to a study by Stanford researchers published this month.

The drilling boom is due in part to the expanded use of hydraulic fracturing, or "fracking," to access oil and gas in tight shale formations, although the salty wastewater being injected into Oklahoma's disposal wells is found naturally in formations along with the oil and gas, and are not fracking fluids.

Other oil and gas states have also experienced increased seismic activity related to expanded water injection. Arkansas responded with a moratorium on disposal wells in the most sensitive areas, a plan favored by some Oklahoma activists and at least one state legislator.

But most of Oklahoma's elected officials have been reluctant to shackle an industry that directly generated more than 7 percent of state revenues last year in the form of production taxes from companies like Devon Energy Corp, SandRidge Energy Inc, and Chesapeake Energy Corp.

Rice Energy Exec: 90% of Utica Gas Will Come from 3-4 Counties

An update on what Rice Energy is up to, from none other than Rice’s vice president in charge of exploration, Derek Rice. Derek said at yesterday’s Hart Energy DUG East conference in Pittsburgh that his company is, this week, finishing up work on a Utica Shale well in Greene County, PA. Derek admitted there’s differing opinions within the company about whether or not they should be drilling Utica wells in PA.

He says the rock is great, they’re convinced of that. The “problem” is that it costs a heck of a lot more to drill a deep Utica well than it does a Marcellus well. If Rice can squeeze more costs out of drilling a Utica well, it will be profitable.

He also said something very interesting about the geography of the Utica–that he believes 90% of the gas that will come out of the Utica play will come from just three or four counties…

Iran Seen Struggling by WoodMac to Restore Lost Oil After Deal

Iran will probably struggle to restore lost crude production if it secures a deal to ease sanctions because the condition of halted fields will have deteriorated and more investment will be needed, according to Wood Mackenzie Ltd.

The country would be able to increase crude output by 120,000 barrels a day by the end of the year if it reaches an agreement on its nuclear program, according to a report by the Edinburgh-based consultant and Verisk Maplecroft. The report forecasts a further daily increase of 260,000 barrels by the end of 2016 and 220,000 barrels the following year.

Iran and world powers are working towards an agreement that would ease sanctions on the OPEC member’s oil sales in return for curtailing its nuclear activity. A “deal leading to the unwinding of sanctions is likely,” Wood Mackenzie estimates. Restrictions imposed on Iran’s oil trade in 2012 have curbed its shipments by about 50 percent.

“We have taken a conservative view of the pace of ramp-up of production should sanctions be removed,” Lindsay Grant, an analyst at Wood Mackenzie, said in an interview in London. “This is because of the uncertainty around the ability of the fields to produce at pre shut-in levels and whether or not there has been any reservoir or facility degradation.”

With sufficient investment by international oil companies, Iran could raise production to 4.4 million barrels a day by 2025, according to the report. The country will need to offer “competitive” terms to prospective investors because other producer nations are currently seeking investment, it said.

Russia's second biggest oil producer, Lukoil, expects its oil output in Russia to decline by around 2 million tonnes, Ravil Maganov, the company's deputy president on exploration and production, said on Thursday.

The company had planned to produce 86 million tonnes (1.73 million barrels per day) of oil this year, on a par with 2014 results.

Bp bids for Penn Virginia?

BP has offered US$8 a share for Penn Virginia, which drills for oil in Texas and elsewhere in the US, and has a market capitalisation of about US$319.2mln, according to people familiar with the matter.

Penn is understood to have rejected the offer because it believes the terms offered undervalue the company, and is holding out for at least US$10 a share.

It is believed rivals to BP such as Exxon Mobil Corp and Chevron may also be interested in buying the company.

Penn’s share price has fallen to about US$4.50 a share from just below US$17 a share in June last year as oil prices have plummeted.

In 2010, Penn decided to shift its investment and production focus from natural gas towards higher margin oil.

It sold natural gas assets in south Texas in January 2014 and further assets in Mississippi in July last year to focus on the Eagle Ford Shale in south Texas.

The Eagle Ford Shale is one of the biggest onshore unconventional finds in the US, but billionaire Penn shareholder George Soros, who is thought to own about 8% of the group, has reportedly urged it to find a buyer or a partner that could exploit its reserves more efficiently.

Penn is understood to have appointed Bank of America Corp to help it in its search for potential buyers.

An oil analyst in London speaking on condition of anonymity pointed out that BP has been rationalising its business in the US following the Gulf of Mexico rig blowout in 2010, but the analyst said: “It’s a good time to buy cheap assets for majors trying to replace reserves and production.”

The analyst added: “Consolidation in the US has to happen and there are players with deep pockets who would take out some smaller US independent explorers and producers who may not be able to fund their production themselves.”

A spokesman for BP said: “We would not normally comment on market rumour and speculation.”

Penn increased production in the Eagle Ford Shale by 23% to 21,390 barrels of oil equivalent per day (boepd) in the first quarter of 2015 against 17,459 boepd in the three months to the end of December last year. In October last year, it owned about 104,300 net acres in the Eagle Ford Shale and said it planned to further increase its acreage position near its existing holdings. It said its lease position gave it more than 1,600 drilling locations or the equivalent of about 12 years of drilling sites.

Fluxys

Capacity doubled: new facilities commissioned. In April 2008, a fourth storage tank and additional regasification facilities were put into service at the LNG terminal, doubling its throughput capacity from 4.5 to 9 billion cubic metres of natural gas per year and enabling reception of 110 cargos per year instead of 66 previously.The fourth tank increases the terminal’s cycling storage capacity from 240,000 cubic metres to380,000 cubic metres of LNG, equivalent to about three shiploads. The additional regasification facilities raise the sendout capacity from 950,000 to 1.7 million cubic metres of natural gas per hour, allowing an entire LNG cargo to be regasified and injected into the grid in about two days.With its throughput capacity doubled, the terminal is expanding its role as an LNG gateway to Western Europe, since natural gas from the facility can either be supplied to the Belgian market of brought to any neighbouring market. The capacity enhancement will also have a positive impact on the Belgian market as it increases security of supply and supports the development of more competition.

~2008.

Fluxys Belgium invested €101 million in 2013. The biggest projects were the pipeline replacement between Ben Ahin and Bras with a new pipeline of a larger diameter (with the new pipeline being commissioned in September 2013) and the construction of a second jetty at the Zeebrugge LNG terminal (which is progressing according to schedule).

Attached Files

U.S. motorists set new record for driving in April

U.S. motorists drove a record number of miles in April, U.S. government data showed on Wednesday, as a resurgence in road travel that has lasted over a year showed no signs of easing.

Americans logged 267.9 billion miles on U.S. roads in April, the highest for the month on record going back to 1990 and up 3.9 percent from a year earlier, according to data released by the Federal Highway Administration.

That's the 14th consecutive month of year-on-year growth, with north-central and western regions accounting for just under one-half of the total, growing at the fastest pace.

For the first four months of the year, motor travel was up by 37 billion miles, or 3.9 percent, to a record 987.8 billion miles, as a drop in U.S. gasoline prices spurred more Americans to take to the road.

Domestic US oil production week ending June 19th

Summary of Weekly Petroleum Data for the Week Ending June 19, 2015

U.S. crude oil refinery inputs averaged over 16.5 million barrels per day during the week ending June 19, 2015, 250,000 barrels per day more than the previous week’s average. Refineries operated at 94.0% of their operable capacity last week. Gasoline production increased last week, averaging over 9.9 million barrels per day. Distillate fuel production decreased last week, averaging about 5.0 million barrels per day.

U.S. crude oil imports averaged about 6.8 million barrels per day last week, down by 302,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.0 million barrels per day, 3.5% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 896,000 barrels per day. Distillate fuel imports averaged 128,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.9 million barrels from the previous week. At 463.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.7 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 1.8 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.3 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 6.7 million barrels last week.

Total products supplied over the last four-week period averaged over 19.8 million barrels per day, up by 7.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.4 million barrels per day, up by 4.5% from the same period last year. Distillate fuel product supplied averaged over 3.8 million barrels per day over the last four weeks, down by 0.9% from the same period last year. Jet fuel product supplied is up 7.4% compared to the same four-week period last year.

Exxon Mobil Corp has been forced to halt operations at three offshore oil platforms because it could not deliver to refineries in the wake of a broken pipeline that spilled up to 101,000 gallons of crude on the Santa Barbara coast, the company said.

Operations temporarily ceased last week because Santa Barbara County rejected its emergency application to truck oil to refineries, spokesman Richard Keil said on Tuesday.

A Santa Barbara County official said the company’s problem did not constitute an emergency and it could go through the normal procedure, which requires extensive environmental review, to get a permit to truck the oil.

The shutdown is not expected to have an effect on oil prices, but it does harm Exxon Mobil’s bottom line even though production from the platforms is small compared with the company’s overall output, said Tom Kloza, global head of energy at the Oil Price Information Service.

Crude was selling last week for $60 to $64 a barrel and could fetch more than $91 when refined for automobile gas, he said. That provided a lot of incentive for Exxon Mobil.

“I’m sure it’s a royal pain for them,” Kloza said. “Given the profit margins for gasoline, whether you have to [deliver] it by wheelbarrow or rickshaw, you’re very motivated.”

Exxon Mobil had cut production from the rigs by two-thirds after Plains All American Pipeline’s conduit was shut down by a spill on 19 May that soiled pristine coastline and spread tar balls as far as Los Angeles County, about 100 miles away. Nearly 200 birds and more than 100 marine mammals have been found dead in the waters.

U.S. West Coast refiners snap up Russian crude cargoes

Refiners on the U.S. West Coast and Hawaii have stepped up purchases of Russian crude, taking advantage of a narrow gap between U.S. and global prices as they look to guard against a seasonal shortage of Alaskan supply, trade and industry sources said.

Up to four tankers were expected to carry nearly 3 million barrels of Russia's ESPO crude from Kozmino near the city of Vladivostok to refineries in the United States this month and next, the sources said.

That will help Russia diversify beyond key buyers in China, South Korea and Japan at a time when Asian markets are grappling with oversupply. Sanctions against Russia over its actions in Ukraine bar U.S. oil companies from drilling in the country, but purchases of oil are still allowed.

But traders said the shipments marked only a temporary trend as refineries were buying amid uncertainty over the supply of Alaska North Slope (ANS) crude during the summer months. ANS is regularly shipped to the U.S. West Coast, but production normally falls in summer due to field maintenance.

Reuters ship tracking data confirms that the Aegean Power tanker loaded 730,000 barrels of ESPO crude last week and is due to arrive at the Long Beach refining hub in Los Angeles on July 9.

One industry source, who was not authorised to speak to the media, said Chevron Corp likely bought the cargo for processing at its El Segundo refinery in Los Angeles. A spokesman for the U.S. oil major declined to comment.

Two or three additional cargoes are due to load either later this month or next, with Valero Energy Corp shipping Russian crude to one of its two refineries on the U.S. West Coast, and Par Petroleum taking at least one cargo to Hawaii, according to four trade and industry sources.

LNG Disaster. Stock market still in denial.

From Credit Suisse:

■ The Sinopec issue is clearly polarising people: The reaction of investors to yesterday’s note is interesting. It evoked strong, and polar, views. Some see it as churlish to question any risks, given APLNG’s total protection under 100% Take or Pay. Others point to iron ore and see a high probability of default. We probably agree with neither school. There’s a grey area in between, with varying degrees of pain to Origin, to test. Whilst it may come at no financial pain to them (aside from any un-contracted volumes spot), we believe that lifting destination restriction would be the first step into the grey.■ Origin has already waived binding APLNG terms: We continue to believe commercial logic may need a compromise to be reached. Let’s not forgot that in February 2011 Origin agreed to ‘defer’ (triggers unlikely to be met) the 2x $500m FID payments from Conoco to Origin. The rationale was ‘to better align economic interests’. It may have been needed, but it was a clear deviation from a binding legal agreement. Sound remotely familiar?

Exactly right. Firms will bury the truth in volumes of Orwellian legalese but the bottom line will be that under pressure from a collapsing spot market these contracts will break just as they did in the iron ore market.

Attached Files

Saudi Arabia Pumps Oil Flat Out in Citi, Goldman’s New Oil Order

Not content with the blow it’s dealt to U.S. oil drillers, Saudi Arabia is set to escalate the battle for market share by raising production to maximum levels.

The world’s largest oil exporter has already increased output to a 30-year high of 10.3 million barrels a day in a bid to check growth from nations including the U.S., Canada and Brazil. It will add even more to the global glut, according to Goldman Sachs Group Inc. Citigroup Inc. predicts the kingdom will push toward its maximum daily capacity, which the bank estimates at about 11 million barrels, in the second half of 2015.

Saudi Arabia steered the Organization of Petroleum Exporting Countries in November to protect its market share in the face of swelling U.S. crude output, rather than cut supplies to shore up prices as it did in the past. Having abandoned the role of swing supplier -- adjusting production in line with demand -- the kingdom will maximize sales to increase pressure on producers outside the group, the banks said.

“If you are Saudi Arabia and you’re looking at the new oil order we live in, you would go to full capacity,” Jeff Currie, head of commodities research at Goldman Sachs in New York, said by e-mail on June 15. “The world has come around to the realization that the U.S. shale barrel is the swing barrel.”

Estimates vary on how high Saudi production might go. Oil Minister Ali Al-Naimi reiterated in St. Petersburg Thursday that his country has about 1.5 million to 2 million barrels of daily reserve capacity and is ready to increase output if demand rises. The IEA, a Paris-based adviser to industrialized nations, assesses the full capacity at 12.3 million. Saudi Arabia’s decision not to push beyond 10 million during the 2011 crisis in Libya suggests the maximum is closer to 11 million, said Seth Kleinman, head of energy strategy at Citigroup.

“The clear implication of Saudi Arabia’s new oil policy of pressuring high-cost producers is for them to increase production and exports,” Kleinman wrote in an e-mail on June 15. “With an increasingly compelling picture of lower oil prices over the next 10 to 20 years, it makes sense for Saudi to use it all and use it now.”

Shell’s Arctic drilling plans may hit permitting snag

Shell’s plans to bore two wells in the Arctic Ocean this summer may be jeopardized by an obscure permitting requirement that effectively bars drilling operations close to each other in waters off Alaska.

The restriction highlighted by environmentalists opposed to Shell’s Arctic drilling campaign could be a major stumbling block for the company, which has spent $7 billion and seven years pursuing oil in the region.

The restriction is embedded in the rules for obtaining a “letter of authorization” allowing companies to disturb walruses, seals and other animals in the region — among the last permits Shell needs to launch activities in the Chukchi Sea next month. Under a 2013 Fish and Wildlife Service regulation, those authorizations are precluded for drilling activities happening within 15 miles of each other.

The two wells Shell wants to drill this summer are about 9 miles apart.

A coalition of environmental groups insisted Tuesday that the requirement should block Shell’s planned Arctic drilling and force the Obama administration to rescind earlier approvals.

Any letters of authorization issued to Shell “would violate an explicit condition of the governing regulations, the organizations said in a letter to Interior Secretary Sally Jewell. And they noted that Interior Department regulators did not consider a one-well drilling program when they evaluated the environmental impacts of Shell’s broad exploratory plan for the Chukchi Sea before approving it earlier this year.

The groups, including the Natural Resources Defense Council, Oceana and the Sierra Club, suggested that if the Obama administration allowed Shell to drill even one of its planned wells in the Chukchi Sea — much less two simultaneously — it would not be “lawful or “defensible,” because of the limited scope of that earlier environmental analysis.

Shell has asked federal regulators for permission to drill two wells into its Burger prospect about 70 miles off the coast of Alaska this summer, with more possibly next year. It has lined up two drilling rigs for the job, including one now en route to Dutch Harbor, Alaska to wait for final approvals.

Only four of those needed approvals are left: Two well-specific drilling permits from the Interior Department’s Bureau of Safety and Environmental Enforcement and the two letters of authorization from the Interior Department’s Fish and Wildlife Service.

Shell appeared to be aware of the Fish and Wildlife Service’s prohibition on contemporaneous drilling activities as far back as February 2013, when it sent a letter to the agency objecting to the then-proposed rule.

E.ON puts North Sea, Algeria assets on the block

German utility E.ON wants to sell its North Sea and Algerian oil and gas assets, hoping to raise around $2 billion as it restructures, several banking sources said.

The move adds to the rising number of North Sea assets on the market as a result of lower oil prices, but with few deals being concluded.

E.ON has given several prospective buyers access to data on its international exploration and production assets ahead of the official launch of the sale mandate which is expected in the coming weeks, bankers and industry sources said.

Bank of America Merril Lynch is arranging the sale process, which will be held through an auction, according to the sources.

"E.ON has opened up data rooms for its North Sea and Algerian assets," one source said.

The assets are estimated to fetch around $2 billion, though oil price valuations between buyers and sellers have varied significantly in recent months following the drop in crude prices over the past year.

As a whole, E.ON's E&P unit made 1.1 billion euros ($1.23 billion) in earnings before interest, tax, depreciation and amortization (EBITDA) last year, about 13 percent of the utility's total.

Most of it comes from the group's North Sea assets, which had a combined output of 22.3 million barrels of oil equivalent (boe) in 2014.

In Norway, E.ON has a 30 percent stake in the Njord field, a 28.1 percent stake in the Skarv field and a 17.5 percent stake in the Hyme field, according to its website.

In the British North Sea, it operates the Huntington, Babbage, Johnston, Hunter and Rita fields and also holds interests in several producing fields.

In Algeria, E.ON holds a 49 percent of the exploration licence for the Rhourde Yacoub area in the Berkine basin, according to its website.

APPEA: gas reservation raises LNG costs in WA

The Western Australian government must avoid imposing additional cost and complexity on liquefied natural gas projects, the Australian Petroleum Production & Exploration Association said on Tuesday.

The Government today confirmed that the State’s domestic gas reservation policy would be applied to a floating LNG project for the first time.

APPEA Western Region Chief Operating Officer Stedman Ellis said the decision to force projects to reserve gas for the state’s domestic market amounted to a de facto tax.

“In what is now a new investment climate, the Government should be looking to reduce the cost and regulatory burden on LNG projects if it wants to attract investment,” Ellis said.

“Instead, it continues to do the very opposite by imposing a gas reservation policy that simultaneously acts as a tax on gas production and a subsidy on gas consumption,” he added.

According to Ellis, the reality is the policy is not needed to deliver energy security because, as the Independent Market Operator advised last year, WA’s domestic gas market is already well supplied into the future.

The Economic Regulation Authority has also warned that the policy would have negative economic consequences for the State, he said.

“The Government needs to accept that its reservation policy simply adds to the capital cost of projects that are already facing growing global competition,” Ellis concluded.

Indonesia selling 79 LNG cargoes

Indonesia’s industrial customers have been unable to consume the liquefied natural gas produced at Tangguh and Bontang LNG plants creating a surplus of cargoes that are being placed on offer.

SKK Migas’ spokesman Zudaldi Rafdi told Platts, that 79 cargoes to be loaded in 2015 and 2016 are being offered from Indonesia’s LNG plants. Both facilities can not cut on production as it would cause issues in the long-term production and customers for which the LNG is allocated are failing to consume the volumes due to economy-driven slump in consumption.

Rafdi said the cargoes will be offered on the spot market or existing buyers.

According to him, Tangguh LNG plant will have 23 excess cargoes, six in 2015 and 17 in 2016, while the Bontang LNG plant will produce 56 excess cargoes in the same two-year period. The plant is set to put out 13 excess cargoes in 2015 and 43 cargoes of liquefied natural gas in 2016.

Russia Pips Saudi Arabia in Race to Grab China Oil Market Share

Russia surpassed Saudi Arabia to become China’s top crude supplier as the fight for market share in the world’s second-largest oil consumer intensifies.

China imported a record 3.92 million metric tons from its northern neighbor in May, according to data emailed by the Beijing-based General Administration of Customs on Tuesday. That’s equivalent to 927,000 barrels a day, a 20 percent increase from the previous month. Saudi sales slumped 42 percent from April to 3.05 million tons.

China is becoming a key market for global oil exporters as surging output from shale fields from Texas to North Dakota allows the U.S., the biggest crude consumer, to rely less on overseas supplies. The Asian nation will account for more than 11 percent of world demand this year, the Paris-based International Energy Agency predicted this month.

“This is a clear sign of how spoilt Asia is for choice these days, with Middle Eastern crude now having to compete with oil from other regions,” Amrita Sen, the chief oil-market analyst at Energy Aspects Ltd., a London-based consultant, said in an e-mail. “Russia is increasingly looking east and the various deals made between Rosneft and China are likely to see more Russian crude head to China permanently.”

Russia is China’s top crude supplier for the first time since October 2005 as it seeks new markets for its crude amid western sanctions over its dispute with Ukraine. OAO Rosneft in 2013 agreed to supply 365 million tons over 25 years to China National Petroleum Corp. under a $270 billion deal. The same year, the company agreed an $85 billion, 10-year deal with China Petrochemical Corp.

Russia isn’t the only crude shipper to overtake Saudi Arabia last month. Angola sold 3.26 million tons to China, 14 percent more from April, rising two places to take second spot. The Middle East country lost its top rank for the first time in 13 months.

“Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said in an e-mail, referring to the Chinese currency. “If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar.”

In April, Saudi Arabia had expanded its share of China’s oil market as it shipped 5.26 million tons of crude to the Asian nation, the highest level since July 2013.

The Middle East producer raised official prices for its main crude grades sold to Asia the past four months, after record discounts for March cargoes. Arab Light and Arab Medium were set at 10-month highs for July, according to a statement from state-run Saudi Arabian Oil Co.

Petrofac's order backlog rises to $20.5 bln

Oilfield services provider Petrofac Ltd said strong performance at its engineering and construction division had helped increase its order backlog to $20.5 billion at the end of May.

Petrofac shares rose as much as 11 percent to 965.5 pence on the London Stock Exchange on Tuesday morning.

The company, however, said it expected pretax costs at its Laggan-Tormore project to increase by about 30 million pounds ($47.35 million) as it began additional completion and pre-commissioning works.

The company has incurred about 140 million pounds in costs on the project so far this year.

Petrofac has been taking heavy losses on the Shetland Islands project, buckling under the North Sea's hostile environment and the high cost of doing business in the region.

The company had said in April it expected a pretax loss of about 130 million pounds in 2015, in addition to the $230 million it recognised in February.

Laggan-Tormore, a high-quality oil and gas asset 80 percent owned by French oil major Total, is expected to yield about 93,000 barrels of oil equivalent per day at its peak.

Order backlog at Petrofac's Engineering, Construction, Operations and Maintenance (ECOM) division, which accounted for nearly 80 percent of its revenue last year, grew 12 percent from the end of December.

JP Morgan Cazenove analyst Daniel Butcher said Petrofac's ECOM backlog, which was $17.4 billion at the end of May, had the potential to increase to $20 billion for the first half.

Chief Executive Ayman Asfari said the company stood to secure several contracts in the second half of the year as clients were investing in large projects in its core markets.

The company said it expected its net profit for the year to be weighted towards the second half as several projects were near completion.

Origin Energy's APLNG project faces headache as Sinopec said unable to take gas

Sinopec, which is contracted to buy almost all the LNG from APLNG, is said to have suffered delays to the import terminal it is building to receive the gas.

Serious doubts have arisen over the ability of the biggest customer for Origin Energy's $24.7 billion liquefied natural gas project in Queensland to take delivery of the gas, leading to speculation the Chinese buyer may seek to slow the ramp-up of production, causing a hit to Origin's 2015-16 earnings.

The risks come just months ahead of the long-awaited start-up of the Australia Pacific LNG project, which has been in construction for more than four years and has stretched Origin's balance sheet almost to the limit.

If demand is weak in China and the spot market is also weak it may not be a terrible outcome for offtakers to consider using a take-or-pay provision, waiting for a time that their markets improve.

The problems lie partly in reported delays in the construction by Sinopec of an import terminal in the southern Guangxi province to receive the gas.

But a broader difficulty lies in the unexpected weakness in Chinese gas demand because of high local prices, which means that Sinopec would have difficulty selling it to end-users or finding alternative buyers.

Trade publications in Asia have suggested Sinopec may seek to slow the ramp-up of output at APLNG, or may defer taking commercial deliveries of gas. Otherwise it may seek approval from the APLNG venture to re-sell LNG into Asia, which could result in a loss because oversupply has depressed spot prices.

Production from APLNG, 25 per cent owned by Sinopec, is due to commence next quarter. Some 7.6 million tonnes a year of the 8.6 million tonnes a year capacity is due to be shipped to China, with Kansai Electric taking the rest.

An Origin spokeswoman played down the concerns, pointing to the long-term "take-or-pay" nature of the sales contracts, which mean the LNG has to be paid for by the buyers even if they don't take the gas.

In an analysis of potential outcomes, Credit Suisse energy analyst Mark Samter calculated that if all the LNG had to initially be sold on the spot market instead, fetching a price $US2 per million British thermal units lower than the contract price, then Origin's earnings per share for 2015-16 would be cut by 18 per cent.

Sinopec would need approval from APLNG to be able to re-sell the gas outside of China but that would depress prices in the already weak spot market.

Attached Files

Energy XXI sells Gulf pipeline system for $245 million in cash

Energy XXI will sell a subsea pipeline system in the shallow waters of the Gulf of Mexico for $245 million as part of a broader campaign to shed assets and increase cash.

The offshore oil company, headquartered in Houston, will sell its Grand Isle Gathering System, which moves oil and water from six of Energy XXI’s offshore fields and one field run by ExxonMobil. CorEnergy, a real estate investment trust that owns pipelines and other midstream facilities, plans to pay for the assets in cash. The deal, which is expected to close by the end of the month, boosts Energy XXI’s liquidity to $1 billion.

The announcement is the first step in the company’s previously announced strategy to move away from pipelines and non-core exploration and production assets.

Energy XXI will continue operate the 153-mile pipeline system, which includes the Grand Isle terminal near the company’s shore base operations. In addition, the company will earn revenue by transporting oil for other companies.

“Continuing to maintain operatorship of the (system) is important to us, ensuring transportation of a significant portion of our production, ” CEO John Schiller said in a statement.

Meanwhile, the company also announced Monday that it reached an accord with federal regulators to double its insurance covering potential liabilities associated with decommissioning offshore facilities and plugging and abandoning wells.

Itochu Exits U.S. Shale Selling Biggest Energy Purchase for $1

Itochu Corp. ended its $1 billion foray into U.S. shale by selling its 25 percent stake in Samson Resources Corp. back to Samson for $1.

The sale reverses the Japanese trading company’s biggest purchase of an energy asset when it was made in 2011. The decision to exit was made because of the state of operations at Samson and the outlook for gas prices in North America, the Tokyo-based company said in an e-mailed response to questions.

Since joining with KKR & Co. to buy Samson in what ranked as the biggest leveraged buyout of an oil and gas producer at the time, Itochu has written down all of the 78 billion yen, worth $1.04 billion at the time, it spent on shares of Tulsa, Oklahoma-based Samson. U.S. gas prices fell to the lowest level in more than a decade in 2012, while crude oil halved in price last year.

With bets on commodities misfiring, Japan’s third-largest trading house is relying on other businesses for momentum. The investor in Dole-brand fruit and Paul Smith fashionwear expects to post a record annual profit of 330 billion yen ($2.7 billion) this fiscal year ending in March 2016.

Rival Japanese trading companies have also lost money on their U.S. shale investments. The losses from one investment in U.S. shale pushed Sumitomo Corp. to declare its first net loss in 16 years in the fiscal year ended March.

Itochu’s writedowns on the Samson asset were spread over several years. As such, the book value of the asset was already at zero and the sale will have no impact on Itochu’s net income target for this year, the company said.

Itochu said it will be “extremely careful” with any future investment in U.S. shale and make a close investigation of risks associated with development and energy prices.

Output at Groningen gas field to be capped at 30 bcm in 2015

Dutch Economy Minister Henk Kamp will propose a further tightening of production at Groningen, Europe's largest gas field, the Dutch news agency ANP reported on Monday, sending European gas prices higher.

Output at the gas field, the world's 10th largest, will be capped at 13.5 billion cubic metres (bcm) in the second half of this year and at 30 billion bcm for the whole of 2015, ANP said.

In February Kamp had ordered production to be cut to an annualised rate of 33 bcm for the first half of the year, from 39.4 bcm previously, after the Safety Board said gas companies, regulators and the government had all failed to take the threat of earthquakes seriously enough.

The report of a production cut of 3 bcm in the second half of 2015 led to a tightening of liquidity on the Title Transfer Facility (TTF) gas hub and sent prices in Europe higher.

A government spokeswoman declined comment on the figures. A formal decision was expected on Friday. A spokesman for the NAM Shell /Exxon Mobile joint venture, which exploits the Groningen field, was unavailable for comment.

"There are no numbers to click on the TTF," one trader said, referring to a trading platform that enables buying or selling of gas at the Dutch gas trading hub.

"It seems like every trader is waiting, nobody wants to offer, they are waiting to see which way the market will move."

Dutch gas prices at the TTF hub were higher in early afternoon trade. The July contract was up 1.48 percent at 20.60 euros per megawatt hour, while the September contract gained 1.63 percent, also to 20.60 euros/MWh.

The ANP report, citing anonymous sources in The Hague, said the latest decision was based on a projection that temperatures will remain mild this year and that demand can be met by tapping 3 bcm in overcapacity at the Norg storage facility in Drenthe.

In a conflicting report, local television channel RTV Noord said Kamp would propose a production cap of 33 bcm.

Lukoil to use cash flow on projects, dividends, loans-VP

Russian oil producer Lukoil plans to use its cash flow for its most effective investment projects, dividends and paying off loans, Lukoil's vice president for finance said on Monday.

Alexander Matytsyn also said the oil firm, Russia's second largest, had been handed a five-year loan worth 350 million euros ($398 million) from Italy's Unicredit bank in the spring but that it did not plan to borrow any big sums during the rest of the year.

Carlyle Invests $500 Million in South Asia Focused Magna Energy

Carlyle Group LP said it plans to invest up to $500 million in a South Asia-focused energy company led by former Cairn Energy Plc executives.

The equity investment in unlisted Magna Energy Ltd. will help the U.K. company develop its oil and gas projects across the Indian subcontinent, Carlyle said in a statement.

Magna was founded in 2013 by Mike Watts and Jann Brown, former executives of Cairn Energy, for oil and gas development and production, with a secondary focus on exploration.

“We believe there is strong growth potential in countries such as India, Bangladesh and Myanmar, which seek to grow their local energy markets,” the two Magna executives said in a statement.

Watts and Brown stepped down from Cairn in April last year amid a tax dispute with India. The country’s tax authorities have claimed that Cairn failed to pay sufficient tax on its $2 billion sale of shares in Cairn India Ltd. in December 2006. Cairn disputes the tax claim.

Funding for the Magna investment will come from Carlyle International Energy Partners, a fund that focuses on oil and gas investments in Europe, Africa, Latin America and Asia.

In April, Carlyle reported a 5.4 percent drop in first-quarter profit, weighed down by lower fees from managing hedge funds and by losses on its energy holdings. Carlyle’s largest announced investment in South Asia was the 2007 purchase of a $607 million stake in Indian home-loans provider Housing Development Finance Corp., according to data compiled by Bloomberg.

Russia's Bashkortostan to get stake in Bashneft oil firm- Interfax

Russian President Vladimir Putin has signed a decree on transferring a 25 percent plus one share stake in medium-sized oil producer Bashneft to the region of Bashkortostan, Interfax news agency said on Monday.

A Moscow court transferred shares in Bashneft from Sistema - a conglomerate owned by billionaire businessman Vladimir Yetuvshenkov - to the state last year after ruling its privatisation was unlawful. Bashneft is based in Bashkortostan in Russia's Ural mountains.

U.S. industrial natural gas usage falls unexpectedly

U.S. industrial natural gas usage falls unexpectedly

U.S. manufacturers have not soaked up as much excess shale gas in the first half of 2015 as expected, but the shortfall may be an anomaly as a Gulf Coast manufacturing boom is poised to insulate the sector from seasonal demand fluctuations.

Average industrial demand for gas in 2015 was expected to increase nearly 4 percent over 2014, according to federal energy forecasts. But almost halfway through the year, it has eased about 1 percent to 21.7 billion cubic feet per day from 22 bcfd a year earlier, according to Thomson Reuters Analytics.

The primary reason for the decline was a milder winter this year than last year's brutal cold in the heavily industrialized U.S. Midwest and Gulf Coast.

"The industrial sector has become more temperature-sensitive over the years, so it's not surprising industrial demand was a little disappointing this winter," said Kyle Cooper, managing director of research at energy consultancy IAF Advisors in Houston.

Experts, however, expect the industrial sector to become less weather-sensitive as more manufacturing facilities enter service along the Gulf Coast, where heating is in less demand than in the Midwest.

Power generators and manufacturing companies will consume most of the gas in the United States over the next 25 years, according to the U.S. Energy Information Administration. So far this year, however, only the power sector had gobbled up its share of near-record output from shale fields.

Power generators accounted for 33 percent of U.S. gas consumption, burning on average 23.9 bcfd so far in 2015. That compared with 20.1 bcfd a year earlier and a 10-year average of 19.0 bcfd.

With the retirement of dozens of U.S. coal plants for economic and environmental reasons, power generators used near-record amounts of gas this year because the fuel was relatively cheap.

Futures at the Henry Hub benchmark supply point in Louisiana averaged $2.77 per million British thermal units so far this year, the lowest since 2012. That compared with $4.66 per mmBtu for the same time in 2014.

And the market expects prices to remain low for years as shale gas output grows, with futures trading below $4 through 2022.

Plentiful and affordable gas supplies from shale plays have transformed the United States from one of the world's highest-cost producers 10 years ago to among the lowest-cost today.

Chemical companies alone expect to spend more than $100 billion to build or expand more than 200 U.S. projects and create more than 300,000 jobs by 2023, according to the American Chemistry Council lobbying group.

"The boom in industrial demand will not take off until 2017 to 2020, when many new manufacturing facilities, especially chemical plants, enter service," said Gregory Shuttlesworth, executive director of natural gas at consultancy PIRA Energy Group in New York.

The EIA said it expected U.S. industrial companies to continue to consume about 30 percent of the nation's gas over the next 25 years, compared with more than 35 percent 15 years ago.

Oil prices expected to 'improve' on rising demand, low stocks: Naimi

Saudi Arabia's oil minister Ali Naimi is confident that oil prices will rise in the coming months given the increase in global demand and the low level of commercial stocks.

Speaking about the oil market, Naimi was quoted by SPA as saying: "I am optimistic about the future of the market in the coming months in terms of the continuing improvement and increasing global demand for oil as well as the low level of commercial inventories."

This, he said, "is expected to improve the level of prices."

Naimi and Prince Mohammad also met with Russia's President Vladimir Putin, which "reaffirms the significance" of relations between the two countries, SPA reported.

The meeting addressed means of enhancing bilateral relations, particularly in the fields of peaceful use of nuclear energy, military and technical cooperation, housing, the oil and gas sector and investment opportunities.

An agreement was signed on cooperation in the field of "peaceful use" of nuclear energy, which aims to "promote and strengthen the relationship between the two countries to the best interest of both sides, both economically and technically," SPA reported.

"We have agreed to set up a working group that would consider concrete projects that will allow us] to expand our cooperation," Novak said after the signing ceremony.

Novak said he had seen an interest from Saudi companies to take part in energy projects in Russia, while Russian companies are also interested in taking part in projects in Saudi Arabia.

U.S. oil rig decline extends beyond six months

The number of U.S. rigs drilling for oil declined by four from last week, extending the drop in active rigs for a 28th consecutive week, according to data from oil services firm Baker Hughes.

The number of active oil rigs has plummeted 61 percent, or by 978 rigs, since the peak of 1,609 rigs in October. The current count is 631 active oil rigs. Baker Hughes counts a total of 857 U.S. rigs when including gas rigs, which increased by two from last week.

Although the oil rig count is still in decline, the pace has slowed dramatically from earlier this year. The count dropped by seven rigs the week prior and by 13 rigs the last week of May. The country dropped by just one rig in the week that ended May 22.

The slowing of the rig count decline has corresponded with U.S. oil prices settling closer to $60 a barrel since late April, leading many analysts to believe the worst of the energy sector’s downturn is behind it.

The rig count began plummeting last fall after oil prices collapsed from highs of more than $100 a barrel last summer. Oil companies slashed their capital spending and terminated workers. The industry’s job cuts reached 150,000 worldwide by the end of May, with the U.S. seeing the deepest cuts, according to energy recruiting firm Swift Worldwide Resources.

Producers pulled back from marginal or frontier shale plays where drilling costs are higher. Energy companies are now trying to operate more efficiently and produce oil with fewer rigs and people.

Eagle Ford production dips, but barely

Oil production from the Eagle Ford Shale in South Texas dipped by 6,000 barrels per day in May, according to Bentek Energy.

But the field was still producing about 1.6 million barrels per day, about 21 percent higher than the same month last year.

In April, Eagle Ford production also dipped by 8,000 barrels per day.

Oil production in North Dakota’s Bakken shale formation was relatively flat, increasing by 650 daily barrels between April and May, according to Bentek, an analytics and forecasting unit of Platts. The Bakken was producing around 1.2 million barrels per day, up about 155,000 barrels from the year before.

“The steep decline in rig count and the discouraging oil barrel pricing environment has taken its toll on oil production from the Eagle Ford Shale,” said Sami Yahya, Bentek energy analyst, in a news release. “While producers have been actively making gains in efficiency and high-grading their acreage, the efforts have not been sufficient to prevent oil production from dipping. Still, it is worth noting that production decline from the Eagle Ford in May is very small and is less than the decline noted in April, and production from the Bakken shale remains flat despite the severe cuts in rigs. The shortening of drill times in both of those key shales has helped sustain production levels.”

Bentek said that from May 2014 to May 2015, U.S. crude oil production increased by 870,000 barrels per day.

The Platts Eagle Ford Marker, which shows the value of oil out of the Eagle Ford Shale, has had an average price of $57.11 per barrel for the year, down 38 percent from the year before.

Eagle Ford prices have ranged between $46.22 per barrel and $66.23 per barrel since the beginning of 2015.

Nigeria's Buhari advised to end fuel subsidy - sources

Nigeria's Buhari advised to end fuel subsidy - sources

Nigeria's new president, Muhammadu Buhari, has been advised by his transition committee to end a fuel subsidy programme and privatise Nigeria's four refineries, senior sources in his party told Reuters on Sunday.

Africa's top oil producer and biggest economy heavily subsidises gasoline and relies on imports for the bulk of its domestic demand due to an underperforming refining system.

Buhari, who was sworn in as president three weeks ago, is considering the recommendations made in the strategy report produced by a 19-member committee formed from his All Progressives Congress (APC) party.

"The removal of the fuel subsidy is one of the recommendations of the transition committee," said a senior APC source, who did not want to be named.

"The committee also suggested to Mr President that the four refineries be privatised so that the government stops wasting money on annual turnaround maintenance," he said.

A second APC source also told Reuters that these recommendations were contained in the report given to Buhari earlier this month.Nigeria's Buhari advised to end fuel subsidy - sourcesBuhari's predecessor, Goodluck Jonathan, cut subsidies by 90 percent in the 2015 budget because government revenues have been hit by the slump in oil prices.

Nigeria attempted to end subsidies three years ago, doubling the price of a litre of petrol overnight, in efforts to cut government spending.

The move angered citizens who see cheap pump prices as the only benefit they derive from living in an oil-rich country, and led to eight days of nationwide strikes. The government later reinstated part of the subsidy to end the strikes.

The prospect of the subsidy removal contributed to fuel shortages in the final days of Jonathan's administration as gasoline importers went on strike saying they were owed money from the government.

Last week, the state-owned Nigerian National Petroleum Corporation (NNPC) said its four oil refineries would resume production in July.

The ailing refinery system generally runs well below capacity, sometimes at just 20 percent, due to neglect and pipeline sabotage.

Energy Transfer Equity confirms bid for Williams Co

Energy Transfer Equity LP, a portfolio company that owns energy assets, said it has made an all-equity offer of $53.1 billion, including debt, to merge with Williams Companies Inc.

Energy Transfer equity said it would buy all of the outstanding common stock of Williams at $64 per share, which represents a 32.4 percent premium to its closing price on June 19.

Natural gas pipeline company Williams Companies Inc said on Sunday it is exploring strategic options after it received an unsolicited takeover proposal for $64 per share or $48 billion.

Williams did not name the party who made the offer but it said its board determined the proposal "significantly undervalues" the company.

Energy Transfer Equity LP, a portfolio company that owns energy assets, is the bidder referred to in Williams' announcement on Sunday, according to a person familiar with the matter.

A spokeswoman for Energy Transfer Equity could not immediately be reached for comment.

Williams said it will continue with its definitive agreement to acquire all of the public outstanding shares of Williams Partners, which gathers, processes and transports natural gas.

The company said that the offer from the unnamed party was contingent on termination of Williams' pending acquisition of Williams Partners.

"In light of the unsolicited proposal, our board believes it is in the best interest of shareholders to conduct a thorough evaluation of strategic alternatives," Alan Armstrong, president and chief executive of Williams, said in a statement.

Williams retained Barclays and Lazard to assist with the strategic review.

Cushing Inventories Rise for the First Time in 7 Weeks

The EIA reported that Cushing crude oil inventories rose by 112,000 barrels to 58.11 MMbbls in the week to June 12. Last week’s rise snapped a seven-week falling streak.

What does this mean?

The rise in inventories is bearish for WTI crude oil prices. In turn, it’s negative for US oil producers .

2015 versus 2014 inventories

Crude oil stocks at Cushing had been rising continuously since November 2014. However, since April 2015, the pace of the rise slowed down. In the April 24 week, inventories fell for the first time in almost six months. They had been falling consistently until last week

Earlier in 2014, inventories fell consistently before rising toward the later part of the year. The fall in 2014 was mostly a result of new infrastructure coming online. This enabled more crude oil to move out of Cushing.

Rosneft Agrees to Sell 20% of Taas Subsidiary to BP

Rosneft announced Friday that it has signed a final binding agreement to sell a 20 percent share of its subsidiary company Taas-Yuryakh Neftegazodobycha (Taas) to BP.

The Taas joint venture will further develop the Taas operated Srednebotuobinskoye oil and gas condensate field in the Sakha Republic, Yakutia, building infrastructure to aid further exploration of the region’s reserves. The Srednebotuobinskoye field’s reserves under Taas’ C1 and C2 lincensed areas total 133 million tons of liquid hydrocarbons and 4.8 trillion cubic feet of gas, according to Rosneft.

Rosneft and BP have also agreed to explore two additional areas of mutual interest in the West Siberian and Yenisey-Khatanga basins, covering a combined area of around 100,000 square miles. This agreement commits BP and Rosneft to conduct studies and, if successful, establish new joint ventures to obtain licenses and perform exploration activities. Any joint ventures will be owned 51 percent by Rosneft and 49 percent by BP. As part of this agreement Rosneft and BP will also form a joint venture to carry out further appraisal work on the Baikalovskiy field, discovered by Rosneft in 2009.

"Eastern Siberia is a priority area for Rosneft. Taas-Yuryakh Neftegazodobycha is carrying out a set of actions with the aim to further expand local infrastructure and boost production capacities. I’m glad that our cooperation with BP is developing in such a promising area."

EU bosses say new Russian gas pipeline must comply with bloc's laws

A planned expansion of the Nord Stream pipeline that delivers Russian gas to Germany must comply with EU laws, the European Commission said on Friday, adding it was working to maintain Ukraine's role as an important transit country.

Russia's Gazprom said on Thursday that Royal Dutch Shell and its long-time gas buyers in Europe - Germany's E.ON and Austria's OMV - had agreed to build two new Nord Stream gas pipelines under the Baltic Sea to Germany.

The announcement runs counter to Commission efforts to work with suppliers other than Russia, and to create a robust energy union based on closer collaboration between the 28 member states and sharing of available supplies.

Russia provides around a third of the EU's energy.

In its first public response to Thursday's news, the Commission said it would be vigilant about enforcing EU law that prevents any one supplier dominating the market and would keep working with Ukraine as "a major reliable transit country".

"The European Commission recalls that new pipelines must be built in full compliance with EU legislation and will be vigilant about the rigorous application of EU law notably in the field of energy, internal market and competition," a statement said.

The statement reiterated the Commission's commitment to seeking diverse gas suppliers, including more use of liquefied natural gas (LNG).

Although European domestic gas production is expected to fall, so far only around 57 percent of Russian capacity to the EU is used, the EU executive said.

While the European Union has been seeking to curb its dependence on Russian energy, Russia has been working to diversify its supply routes.

The 55 billion cubic metre per year expansion of Nord Stream is in addition to Gazprom's planned Turkish Stream project to deliver 47 bcm to Europe via Turkey.

Moscow has said the ultimate aim is to cease relying on Ukraine, which the Commission said was the route for roughly half of the Russian gas shipped to the EU.

Alternative Energy

Solar energy company Sunrun files for IPO

U.S. solar energy company Sunrun Inc on Thursday filed with U.S. regulators for an initial public offering of its common stock.

Credit Suisse, Goldman Sachs & Co and Morgan Stanley were among the underwriters for the IPO, the company told the U.S Securities and Exchange Commission in a preliminary prospectus.

Sunrun, which installs and maintains solar panels for homes, has about 79,000 customers across 13 states, as of March 31.

Another clean energy company SolarCity Corp, backed by Tesla Motors Inc founder Elon Musk, has seen its shares rise more than seven-fold since their debut in 2012.

The residential solar market in the United States has grown dramatically in recent years, largely due to cheap prices for panels, particularly those made in China.

President Barack Obama's fiscal 2016 budget proposes a boost in funding for clean energy by 7 percent and a new $4 billion fund to encourage U.S. states to make faster and deeper cuts to emissions from power plants.

Sunrun's filing, which included a nominal fundraising target of about $100 million, did not reveal how many shares the company planned to sell or their expected price.

Sunrun, which intends to list its common stock on the Nasdaq under the symbol "RUN," listed venture capital firms Foundation Capital, Accel Partners and Sequoia Capital among its major shareholders.

The net proceeds from the offering will be used for general corporate purposes, including working capital and capital expenditures, Sunrun said.

The company's net loss more than doubled to about $162.6 million in 2014 from 2013, while total revenue almost quadrupled to $198.6 million.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

GE signs first deal after Australia passes clean-energy target

General Electric Co. agreed to help develop a A$450 million ($348 million) wind farm in Australia, spurred by parliament’s approval of a new renewable energy target.

GE will supply turbines to the 240-megawatt Ararat wind farm in the state of Victoria that’s being developed with partners including Renewable Energy Systems Ltd., according to a statement from the companies. The development is expected to become the nation’s third-largest wind farm.

The legislation passed earlier this week to revise the target ends a period of uncertainty that crippled spending in the clean-energy industry. That should pave the way for more than A$14 billion in new investment in large wind and solar projects, Bloomberg New Energy Finance estimates.

“With certainty comes investment,” Geoff Culbert, GE’s local chief executive officer, said in the statement announcing the first contract to be signed since the policy resolution.

The Victorian wind farm has a power-purchase agreement with the government of the Australian Capital Territory covering about 40 percent of the energy. Partners Group AG, RES, OPTrust and GE will finance the development, while Downer EDI Ltd. will help build the project, according to the statement.

New record for UK green power

A record 22.3% of UK electricity was generated by renewables such as wind, biomass and solar in the first three months of this year, figures show.

The share of power coming from renewables was 2.6 percentage points up on the first quarter of last year and slightly higher than in the previous three months, the data from the Department of Energy and Climate Change revealed.

The total amount of electricity generated by renewables increased by 15% for the first three months of the year, compared to the same period last year, with biomass power plants almost doubling their output.

Electricity from solar panels was up 60% on the first quarter last year, due to more installations, while wind generation increased by 5.3%, with more turbines installed – particularly offshore – offsetting slightly lower wind speeds than in January to March 2014.

Overall, low-carbon power accounted for more than two-fifths (41.4%) of total electricity generation in the first three months of 2015, with nuclear up from 17.6% of the mix in the beginning of 2014 to 19% this year.

Coal-fired generation fell from 37% in January to March 2014 to less than a third (31.3%) for the first three months of this year, while gas was up from 23.2% to a quarter (25%) in 2015.

Rare earths miner Molycorp files for Chapter 11 bankruptcy

Rare earths miner Molycorp Inc filed for Chapter 11 bankruptcy protection on Thursday along with its North American subsidiaries to restructure $1.7 billion of debt in its U.S. and Canadian operations.

Molycorp has also obtained agreement for up to $225 million in new debtor-in-possession (DIP) financing, it said in a statement.

The Greenwood, Colorado-based company listed assets and liabilities of more than $1 billion in its petition in the Delaware bankruptcy court.

The company's operations outside of North America, with the exception of non-operatingcompanies in Luxembourg and Barbados, are excluded from the filings. Molycorp Rare Metals (Oklahoma) LLC is also excluded from the filings.

The case is in U.S. Bankruptcy Court, District of Delaware, Case No: 15-11357.

Norwegian power firms hope to revive 1,000 MW wind project

Norwegian utilities, including state-owned Statkraft and transmission grid operator Statnett, are seeking to revive plans to build a large wind power development just weeks after the project was cancelled, Statnett said on Wednesday.

"The partners will work together to investigate a new 1,000 MW project by the end of September this year," Statnett said in a statement, adding that the aim was to make a final investment decision in the first quarter of 2016.

Power firm Statkraft is expected to have a 50.1 percent stake in the project, while TroenderEnergi aims for 5-10 percent, with a consortium led by Credit Suisse Energy Infrastructure Partners seeking to acquire the remaining shares, Statnett added.

Denmark's Vestas had been picked to supply turbines for the original project.

Coons, Moran, Poe, Thompson bill will level the playing field for renewable energy

Master Limited Partnerships Parity Act would give renewable energy projects access to a tax advantage currently available only to oil, gas, and coal projects

U.S. Senators Chris Coons (D-DE), Jerry Moran (R-KS), and Representatives Ted Poe (R-TX-02), and Mike Thompson (D-CA-05) re-introduced bipartisan legislation to level the energy playing field by giving investors in renewable energy projects access to a decades-old corporate structure whose tax advantage is currently available only to investors in fossil fuel-based energy projects. The Master Limited Partnerships Parity Act is a straightforward, powerful modification of the federal tax code that could unleash significant private capital by helping additional energy-generation and renewable fuels companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.

"Renewable energy technologies have made tremendous progress in the last several decades, and they deserve the same shot at success in the market as traditional energy projects," Senator Coons said. "By updating the tax code, the bipartisan Master Limited Partnerships Act levels the playing field for all domestic energy sources -- renewable and non-renewable - to support the all-of-the-above energy strategy we need to power our country for generations to come. This practical, market-driven solution will unleash private capital and create jobs, and that's why it has earned broad support from Republicans and Democrats in Congress as well as academics, outside experts, business leaders and investors."

Australia's new renewable energy target will unlock more than $10 billion of investment, General Electric said.

The new target of producing 33,000 gigawatt hours of electricity from large-scale renewable energy projects by 2020 will "create thousands of new jobs and grow the order book of hundreds" of companies, GE's Australia chief, Geoff Culbert, said in an e-mailed statement Wednesday.

The legislation passed late Tuesday eases industry disquiet after investment in renewable energy projects stalled amid lawmaker disagreement over what the new level should be. The windfarm industry has been the biggest beneficiary of the RET, with more than 1600 turbines from more than 60 projects now dotting rural Australian landscapes.

The original 41,000 gigawatt-hour goal, introduced in 2009 to reduce reliance on fossil fuels by boosting renewable energy to 20 per cent of the electricity market by 2020, had become unfeasible to Tony Abbott's government. Shrinking power demand as the energy-intensive manufacturing industry contracted and efficiency improvements had seen the share surge toward 26 per cent.

Mr Abbott, who's labeled windfarms as ugly and noisy, has led his government to axe a price on carbon emissions and is yet to announce a post-2020 target to reduce greenhouse gases. Last week, the coalition announced plans to appoint a commissioner to crack down on windfarms.

While industry will welcome the RET agreement, it still needs clarity on the nation's emissions reduction targets, said the Energy Supply Association's chief executive, Matthew Warren.

Renewables to beat fossil fuels with $3.7trillion solar boom

Renewable energy will draw almost two-thirds of the spending on new power plants over the next 25 years, dwarfing spending on fossil fuels, as plunging costs make solar the first choice for consumers and the poorest nations.

Solar power will draw $3.7 trillion in investment through 2040, with a total of $8 trillion going toward clean energy. That’s almost double the $4.1 trillion that will be spent on coal, natural gas and nuclear plants, according to a forecast from Bloomberg New Energy Finance.

The figures show the traditional dominance of coal and natural gas suppliers will slip in the coming years as cheaper renewables mean developing nations can tap less-polluting sources to meet their swelling energy needs. The forecast from New Energy Finance also indicates that coal will remain an important fuel, suggesting policy makers must take further steps to control greenhouse gases.

“We will see tremendous progress toward a decarbonized power system,” Michael Liebreich, founder of New Energy Finance, said Tuesday in a statement as the research group released its findings in London. Despite this, emissions will continue to rise “for another decade-and-a-half unless radical policy action is taken.”

Greenhouse gas emissions will increase until 2029. That’s almost a decade past the date the International Energy Agency has set as target that would lead to capping the global increase in temperatures at 2 degrees Celsius (3.6 degrees Fahrenheit) by 2100.

Developing nations will account for 79 percent of 8.9 terawatts of new power capacity added worldwide, according to New Energy Finance, with solar reaping the biggest gains.

Most of the solar projects in these regions will be large- scale power plants, with about 1.5 terawatts installed by 2040, compared with about 800 gigawatts of small-scale and rooftop systems.

That pattern will be reversed in developed countries, with 271 gigawatts of large solar farms compared to almost 900 gigawatts of smaller power systems, according to New Energy Finance.

Worldwide, rooftop and small-scale solar plants will jump nearly 17-fold from 104 gigawatts last year to nearly 1.8 terawatts in 2040.

With prices for solar panels expected to plunge 47 percent, the industry is going to flourish because of basic economics instead of government subsidies, said Jenny Chase, chief solar analyst at New Energy Finance.

‘Solar is Cheap’

Because sunshine is free, the cost advantage over fossil fuels will continue to increase. “Solar is cheap and it’s only going to get cheaper,” she said in an interview.

Solar Thermal Desalination Now Underway in Water-hungry California

The controversial Carlsbad desalination project’s latest projected cost is now $1 billion. It will suck in 100 million gallons of San Diego’s seawater a day and force it through a series of filters to produce 50 million gallons of water a day using high-pressure reverse osmosis.

A modest solar thermal desalination alternative now quietly undergoing permitting inland would produce 5 million gallons of water, about one tenth of that of Carlsbad, but at a much lower cost of just $30 million, using a solar distillation process.

A 5 ft-wide roll of silver-coated aluminium Reflectech slides into each unit making up SkyFuel's 20 ft wide parabolic trough used on the solar collector field creating steam for the WaterFX solar still.

WaterFX will use a 24-MW trough-type solar thermal field supplied by NREL-collaborator SkyFuel to create direct steam from the sun to run multi-effect distillation, desalinating enough agricultural water for reuse to keep 2,000 acres of farmland irrigated each year.

WaterFX Chairman Aaron Mandell, who previously founded Oasys Water, a Massachusetts provider of desalination and water-treatment technologies, said he focused on reusing agricultural drainage water because agriculture is California's biggest water user. Selenium and other natural agricultural salts build up in soil, eventually making farming impossible.

"The agricultural sector uses about 80 percent of all the water in California," Mandell explained. "If only 20 percent of the water is being used for municipalities, and you reduce that water consumption by 50 percent, you've only made a 10 percent impact overall. Reducing agricultural use has a much bigger impact."

Last year WaterFX completed a six-month demonstration project that convinced the Panoche Water District to go ahead with the commercial plant. "The water district has been monitoring the pilot project and they're very happy with the results," Mandell said.

250 UK wind projects to be cancelled

Around 250 onshore wind projects already in development are likely to be cancelled because the Government is ending subsidies which would aid their completion, Energy Secretary Amber Rudd has announced.

The cancellation of subsidies for onshore wind offered under the Renewables Obligation (RO) is likely to mean that 2,500 turbines which were due to be built are scrapped, Ms Rudd said.

She said consumer bills will not rise and insisted the move would save taxpayers hundreds of millions of pounds in subsidies that would otherwise have been paid out to energy projects.

Acting on a Tory manifesto commitment to scrap subsidies for onshore wind, the Government is closing the RO to new projects from April next year.

Ms Rudd said a grace period was put in place, allowing projects which had planning consent, a grid connection and land rights by June 18 to continue to be supported under the RO.

But the 250 projects delivering 2,500 turbines do not meet this criteria and are now “unlikely to be built”, she said.

The Energy Secretary told the Commons: “By closing the RO to onshore wind early, we are ensuring that we meet our renewable electricity objectives, while managing the impact on consumer bills and ensuring that other renewables technologies continue to develop and reduce their costs.

SoftBank, partners eye $20 bln investment in Indian solar projects

Japan's Softbank Corp , together with Bharti Enterprises and Taiwan's Foxconn , will invest about $20 billion in solar projects in India, in one of the biggest investment pledges to date in the country's renewable energy sector.

Softbank, which previously said it would invest $10 billion in India over time, said on Monday the companies had agreed a minimum commitment of generating 20 gigawatts of energy.

SoftBank will have majority control in the newly formed company, SBG Cleantech, with Bharti and Foxconn as minority stakeholders.

"India has two times the sunshine of Japan," Softbank Chief Executive Masayoshi Son told reporters in a conference.

"The cost of construction of the solar park is half of Japan. Twice the sunshine, half the cost, that means four times the efficiency."

Son said the timeline for investments would depend on state and central governments and on acquiring land needed for the plants.

The rapidly falling cost of solar power, expected to reach parity with conventional energy by 2017, has ignited interest in its potential in India, as the country steps up its own efforts to encourage investment in renewable energy.

Despite more than 300 days of sunshine a year, India relies on coal for three-fifths of its energy needs, while solar supplies less than 1 percent.

On Monday, Son said Foxconn would help with planned solar equipment for the projects. The companies are looking at manufacturing equipment in India, a further boon for Modi who has sought to boost the portion of equipment made at home.

"India can become probably the largest country for solar energy," Son said.

New wind turbine material to mimic owls

A new material that could make wind turbines and even aircraft quieter by mimicking the design of owls’ wings that allows them to silently hunt their prey has been developed by scientists.

The Cambridge University-led Anglo-American team studied the feathers of the stealthy nocturnal airborne predators to produce the coating, due to be unveiled at a US conference today.

Because of the noise they make, wind turbines are often braked to make them turn more slowly and quietly, but the team behind the new material say that it could enable the machines to turn faster and boost their output without increasing noise as a side-effect.

“Many owls – primarily large owls like barn owls or great grey owls – can hunt by stealth, swooping down and capturing their prey undetected,” said Professor Nigel Peake of Cambridge’s department of applied mathematics and theoretical physics, who led the team.

“While we’ve known this for centuries, what hasn’t been known is how or why owls are able to fly in silence.”

The team, which also included scientists from Virginia Tech, Pennsylvania’s Lehigh and Florida Atlantic universities, said they used powerful microscopes to look at owl wings. They found that they have a “downy covering” to their flight feathers, plus bristles on their on the leading of their wings and an “elastic fringe” on the trailing edges.

Prof Peake added: “No other bird has this sort of intricate wing structure. Much of the noise caused by a wing – whether it’s attached to a bird, a plane or a fan – originates at the trailing edge where the air passing over the wing surface is turbulent. The structure of an owl’s wing serves to reduce noise by smoothing the passage of air as it passes over the wing – scattering the sound so their prey can’t hear them coming.”

The discovery enabled the team to make a 3D printed plastic cover for a wind turbine, which reduced the noise it generated in wind tunnel tests by 10 decibels. They believe it can be adapted for other types of wings and blades and want to move on to improve the coating further and test it on a working turbine.

Their research, funded by the US National Science Foundation and the US Office of Naval Research, will be unveiled later at the American Institute of Aeronautics and Astronautics (AIAA) Aeroacoustics Conference in Dallas, Texas.

Japan is building huge floating solar power plants

Japan has been working to shift more of its energy generation to renewable sources in the years since the Fukushima nuclear plant disaster, aiming to double its renewable energy output by 2030. In that rush, the country has come up with some smart ways to install distributed solar power. The latest idea has been to develop floating solar power plants that cover small inland bodies of water like ponds and reservoirs.

Solar power company Kyocera has been leading the charge and just recently launcheda solar power plantthat floats on a reservoir and will produce about 2,680 megawatt hours per year, enough for 820 typical households. The installation consists of almost 9,100 waterproof solar panels atop a float made of a high-density polyethylene.

Kyocera previously installed this technology in two smaller power plants over ponds earlier this year.

Why make floating solar power plants when the land-based ones do just fine? Well, there are three major benefits to marine solar tech. The first is that they don't take up any land space. In Japan where cities are dense and rooftop solar has really taken off, water-based solar power is another way to rack up some clean energy, without taking up extra space.

The second, and most important, is that the water helps the solar panels perform better. The water keeps the panels cool, which makes them operate more efficiently and helps them last longer.

The third benefit is to the body of water itself. When panels are placed over reservoirs, they discourage water evaporation and algae growth, both of which keep the reservoirs fuller and healthier.

Kyocera has even bigger plans for floating solar power. The company is working on a 13.4-megawatt project on the Yamakura Dam reservoir, which will be the largest floating solar installation in the world when it starts operation in March 2016.

The plant will be comprised of approximately 50,000 Kyocera modules over a water surface area of 180,000m2. It will generate about 15,635 megawatt hours (MWh) per year, the equivalent of the energy demand of 4,700 typical households.

US DOE announces new clean energy initiatives

The US Department of Energy has announced several new and expanding initiatives as part of the Administration’s Clean Energy Investment Summit, including the launch of a Clean Energy Impact Investment Centre (CEII), which will work to make the Department’s resources more readily available to the public, as well as mission driven investors.

Clean energy finance is a key part of the solution set on climate change. The announcement builds off the Clean Energy Investment Initiative that was announced by Senior Advisor Brian Deese at the ARPA-E Summit in February 2015, highlighting expanded private sector investment in solutions to climate change, including innovative technologies with breakthrough potential to reduce carbon pollution.

“The US and other countries are providing substantial financial support to the development and commercialisation of clean energy technologies but, if we are to achieve our climate goals, it is imperative that we find ways to incentivise the global capital markets to invest in clean energy,” said Energy Secretary Ernest Moniz. “The US government is addressing the need for new financing through a variety of programmes that support clean energy technology through the research and development, demonstration, and deployment stages.”

The CEII centre will provide technical assistance, a single point of access for information, connections to other relevant government programmes across the Administration, and consolidate public information on early stage projects and companies that are currently engaged in partnerships with DOE. Moving forward, DOE will work to mobilise a broad range of philanthropists and impact investors to scale up investments throughout the energy innovation pipeline, from laboratory R&D to start up funding to growth stage financing.

Trina Solar plans USD 500 million India plant amid ban

Bloomberg reported that Trina Solar Limited will invest in a USD 500 million plant with India’s Welspun Energy Limited as the world’s biggest supplier of panels seeks to circumvent US and European Union sanctions on solar shipments from China.

Mr Zhiguo Zhu, senior vice president of Trina Solar, said in a phone interview that “The 2 GW facility will be in either the western state of Gujarat or southern state of Andhra Pradesh. Construction of the plant, planned in two phases, will take about 18 months. We’ll use Indian products to export to the U.S. or even Europe.”

According to Bloomberg New Energy Finance, driven by the policy barriers, Chinese companies are setting up capacities globally. Southeast Asia is attracting the most investors, with advantages of low labor costs, local policy incentives and proximity to China, the source of the most raw materials.

The World Health Organization said in May 2014 that global renewable energy companies are flocking to India after Mr Narendra Modi, PM of India, in November set a national target of installing 175 GW of clean power by 2022, an almost fivefold increase from the current installed capacity. India has 11 of the top 20 cities with Earth’s worst air quality.

The executive said that Trina expects demand of as much as 600 MW in India this year.

Mr Zhiguo said that “Next year, India will become our third-largest market. In future, it could become our biggest after China.”

Changzhou, China-based Trina Solar and Welspun Energy of New Delhi signed an accord in May during Modi’s visit to China to jointly set up a photovoltaic industry park in India.

Uranium

World’s first nuclear output rise since Fukushima

Global nuclear output rose for first time since Japan’s Fukushima accident in 2014.

That’s according to new report, which showed world nuclear generation in 2014 rose 1% compared to 2013.

That’s the first annual gain since the 2011 accident.

The disaster curbed global nuclear output sharply, according to the report.

William Freebairn, Platts senior managing editor said: “It is interesting to see a recovery in overall output was driven by growth in units in China and improvements in capacity factors in France, Russia and Korea, which more than offset the reactor shutdowns in Japan, Germany and the US.”

Nuclear power plants generated around 2.039 billion megawatt hours (MWh) in 2014. This was a slight increase from the 2.018 billion MWh in reported generation for 2013, the paper’s data shows.

Canada’s federal government has provided a measure of relief to the country’s depressed uranium mining sector by granting an exemption to foreign ownership restrictions on producing mines.

Late on Monday, Federal Natural Resources Minister Greg Rickford said Australia’s Paladin Energy will be allowed to have majority ownership of its proposed Michelin uranium mine in Newfoundland and Labrador.

Under federal rules, a Canadian company must have at least 51% stake in any uranium project, unless a partner cannot be found.

Paladin was able to show there were no Canadian partners interested in leading the development of the proposed project

The government said Paladin was able to show there were no Canadian partners interested in leading the development of the proposed project, located approximately 140 kilometres northeast of Happy Valley-Goose Bay.

“This is an historic decision that could have implications for all uranium companies and projects in Canada,” Raymond James analyst David Sadowski said in an e-mailed note.

The decision to grant Paladin majority ownership of Michelin will be welcome by other provinces, especially by the Saskatchewan’s government, David Talbot, an analyst at Dundee Securities,told The Globe and Mail. This, despite that province has no stake in the asset, financially or geographically.

“Saskatchewan supports [this kind of ownership exception] for its own jurisdiction, and that’s positive for potentially getting Rio Tinto or BHP to go after some of those smaller companies,” Talbot added.

French nuclear watchdog upsets industry with straight talk

The head of France's nuclear watchdog has upset the industry by taking an increasingly assertive approach that critics say could jeopardise efforts to win more business overseas.

The tensions at the top of a key French industry bring into focus the role of the ASN, an independent body set up in 2006, whose decisions can cost nuclear companies billions of euros.

The ASN shocked the country's mainly pro-nuclear establishment in April when it disclosed that state-controlled Areva had found weak spots in the steel of its flagship European Pressurised Reactor (EPR) which is being built in Normandy.

ASN head Pierre-Franck Chevet made no attempt to play down the importance of the anomalies in a series of subsequent media interviews, calling them "serious, even very serious."

Chevet's decision to be so vocal about his concerns rather than wait for the outcome of further tests ruffled feathers in an industry which accounts for about 100,000 jobs across France.

Nuclear provides around 75 percent of France's electricity but times are hard after the 2011 Fukushima disaster in Japan prompted concerns about the technology in a number of countries.

Areva has lost money for four consecutive years and is going through a major restructuring, with fellow state-owned EDF poised to buy its nuclear reactor arm.

Chevet's intervention prompted retired EDF executives to write him an unusually blunt letter, calling the ASN's decision to go public on the EPR's problems an "abuse of power".

"Allowing oneself to publicly heap opprobrium on the industrial abilities of a national economic player like Areva based on fragile presumptions at a strategic moment in its history does not seem to be in the remit of ASN," wrote André Pellen, a former member of EDF's national crisis team.

Although the ASN's sole responsibility is safety, its decisions can have material consequences for Areva and EDF.

Chevet said the French industry should see the close supervision as a guarantee of quality.

For Yannick Rousselet of Greenpeace France, the increasingly blunt tone is due to the responsibility of supervising a country with 58 nuclear reactors in a post-Fukushima world, rather than to Chevet's personality.

"He does not want to be the guy who wakes up tomorrow having the responsibility to deal with an accident like Fukushima."

Agriculture

Germany's K+S confirms takeover proposal from Potash Corp

German potash producer K+S said on Thursday it has received a takeover proposal from larger Canadian fertilizer producer Potash Corp of Saskatchewan Inc, potentially marking the start of a new takeover saga in the industry.

K+S said it was assessing its options. Two sources close to the matter however, said K+S will likely reject the 7 billion euro ($7.8 billion) takeover offer as being too low. The sources said the offer values K+S at just over 40 euros a share.

One of the sources said that the offer is "opportunistic" as it does not reflect the value of the Legacy potash project that K+S is building in Canada. K+S has spent 2 billion euros on that mine that is now 75 percent completed.

Saskatoon, Saskatchewan-based Potash Corp confirmed that it has made a "friendly proposal to K+S," adding that "there is no certainty that any offer will ultimately be made."

This is Potash Corp's second tilt at K+S. A bid to acquire a majority stake in 1997 was blocked by the German competition watchdog. In 2010, Potash Corp itself was the target of a $39 billion hostile bid from mining giant BHP Billiton, but that deal too was foiled after the Canadian government blocked it.

Since then, the once tight global potash market has turned. Potash Corp, long the swing producer, has seen that role eroded in recent years as the potash market has become over-supplied. Miners have built capacity, and competition among sellers has heated up since the 2013 breakup of Belarussian Potash Company, one of the world's biggest potash trading partnerships.

UBS analyst Brian MacArthur, in a note to clients, said it is hard to evaluate a deal without details, but added he thinks that a "deal might make strategic sense for Potash Corp given potential operating, logistics, and marketing synergies."

The German company's shares were up 13.3 percent at 32.45 euros in after-hours trading in Frankfurt. The shares had closed 1.5 percent higher at 29.05 euros in the regular trading session before the report came out.

Shares in Potash Corp, which is mulling selling its shares in Chile's SQM and Israel Chemicals, ended up nearly 5 percent in New York at $31.89.

Potash Corp, which is finishing a big expansion program that should free up cash flow, is currently operating well below full capacity because of weak potash prices.

Gene-modified wheat at centre of row fails to repel aphids

A genetically engineered wheat that gives off a special smell designed to repel aphids has flopped in field-scale tests, underscoring the difficulty of harnessing the controversial technology.

Scientists said the result was disappointing but they aim to amend the process to do better in future, believing that genetic modification (GM) offers a way to develop resilient crops that don't need to be sprayed with pesticides.

Critics, however, fear such GM plants risk contaminating the environment and could jeopardise the food chain.

The work at Britain's Rothamsted Research institute in southern England was the first test of a crop engineered to release an anti-insect pheromone, or smell, and it provoked protests from anti-GM activists who threatened -- but failed -- to rip up the plants.

While the crop survived human attack, however, it fared less well against the aphids.

Results from the five-year project published in the journal Scientific Reports on Thursday showed the GM wheat did not repel aphid pests in the field as hoped, despite initial success in laboratory tests.

Aphids damage wheat by sucking sugar out of plants and spreading viruses, prompting extensive spraying with insecticides made by companies like Bayer and Syngenta.

The Rothamsted team added genes to make the wheat produce the pheromone (E)-beta-farnesene, which is found naturally in other plants, including peppermint, and acts as an alarm call telling aphids to disperse.

It is not clear why the GM crop failed to work as expected but scientists said the aphids may have simply become attuned to the constant alarm signal, in the same way that people get used a car alarm that never stops ringing.

One idea now being pursued is to make the plants produce "puffs" of pheromone when aphids arrive, said Rothamsted's John Pickett, who still sees a future for pheromone-based repellents.

"We see this as heralding a process of controlling insects without necessarily using a spray-on toxicant insecticide," he told reporters. "It's the beginning of an alternative approach."

Monsanto to invest more than $1 bln in dicamba herbicide production

Monsanto Co's efforts to expand its agrichemical interests beyond what has long been its bread-and-butter glyphosate herbicide business were underscored on Wednesday by news the company plans to invest potentially more than $1 billion in a production facility for an alternative herbicide.

Monsanto officials expect to spend the money over the next three to five years expanding a plant in Luling, Louisiana, to produce the weed-killing agent called dicamba. Luling has been a key location for glyphosate production for years.

The interest and investment in dicamba represents a step away from the company's reliance on glyphosate, which is the key ingredient in Monsanto's branded Roundup line of herbicides.

Glyphosate is also the key to many of Monsanto's genetically engineered crop lines. The company makes corn, soybeans, cotton, canola and other crops that can tolerate being sprayed with glyphosate.

"Over the next decade ... this holds the potential to further diversify our ag productivity segment and provide a source of growth longer term," Monsanto President Brett Begemann told analysts in a conference call.

Roundup, and the "Roundup Ready" crops Monsanto engineers have been very popular with farmers, particularly in the United States. However, widespread planting of Roundup Ready corn and soybeans, and associated widespread use of Roundup weed killer, has contributed to the rise of weeds resistant to glyphosate.

The weed resistance problem has become such a significant problem for crop production that farmers are seeking alternatives, and Monsanto and its rivals in the agrichemical industry are racing to introduce new options for glyphosate and Roundup Ready crops.

"The reality is the industry is going to have to continually evolve just like plant life evolves," said Edward Jones analyst Matt Arnold.

Monsanto's solution combines glyphosate with dicamba for what it is calling the "Roundup Ready Xtend" crop system, aimed at soybean and cotton farmers.

Rival Dow AgroSciences, a unit of Dow Chemical Co, has developed crops that tolerate its new herbicide, which combines 2,4-D with glyphosate.

Monsanto said it sees at least a 200 million-acre "practical fit" for its Roundup Ready Xtend system for soybeans and cotton in the Americas.

The company said on Wednesday it is still awaiting approval from Chinese regulators to allow imports of the new soybeans. China is a key buyer of U.S. soybeans, but has shown reluctance to approve imports of new GMO crops.

Profit was $2.39 a share in the three months through May 30, compared with $1.62 a year earlier, St. Louis-based Monsanto said Wednesday in a statement. That beat the $2.06 average estimate of 20 estimates compiled by Bloomberg. Sales climbed to $4.58 billion, from $4.25 billion, trailing the $4.63 billion average estimate.

Monsanto reiterated its forecast for full-year earnings at the low end of $5.75 to $6 a share, before one-time items.

Monsanto overcame lower grain prices and a stronger dollar with help from a payment from Scotts, which expanded a licensing deal to sell Roundup herbicide to consumers.

“The gross profit contribution from the expanded Scott’s Roundup license offsets much of the increased headwinds in the base business,” Don Carson, a New York-based analyst Susquehanna Financial Group LLLP who recommends buying the shares, said in a note Monday.

Corn and soybean prices have fallen in the past year as global output headed for a record. Soybeans, used in cooking oil and livestock feed, lost 22 percent while corn dropped 16 percent.

The dollar has appreciated almost 17 percent in the past year against a basket of 10 leading global currencies.

Malaysia plans to use 10 pct of rubber supply in roads

Malaysia plans to use 10 percent of its rubber supply in roads from 2016 as it looks to eat into excess supplies and shore up rubber prices, ministers said on Wednesday.

The roads will be made using rubber cup lumps, or naturally coagulated latex, which will be processed into bituminous cup lumps and then mixed into asphalt. The Malaysian Rubber Board estimates 4.2 tonnes of cup lumps will be needed for each kilometre of road.

Malaysia expects to produce about 710,000 tonnes of natural rubber this year, Plantations and Commodities Minister Douglas Uggah Embas told a news conference after signing an agreement with the Works Ministry.

"The target is to use 10 percent of Malaysia's rubber for this purpose," he said. "We hope the excess supply of rubber will be drastically reduced ... and help reduce pressure on prices."

Embas said there was a possibility of increasing the usage of rubber in roads to 15 or 20 percent of supply if the project was successful.

Works Minister Fadillah Yusof said the rubberised roads would save on costs, be cheaper to maintain and help roads last longer.

The ministry was also looking to use seismic rubber in building structures to protect buildings and absorb shocks in high-risk earthquake areas, he added. In June Malaysia was hit by a 6.0 magnitude quake that killed hikers on its highest peak, Mount Kinabalu.

Egyptian Cotton: A disappearing crop

Egyptian cotton once dominated the colonial economy in the age of Queen Victoria, eventually becoming the gold standard for the world’s finest linens and clothing. Two centuries later, everyone from Martha Stewart to Christian Dior still prizes the supple fiber for its softness and durability.

In Egypt, not so much. Farmers are abandoning a crop that was as much a part of the nation’s identity as the Pyramids. They’re switching to grains because long-fiber cotton isn’t profitable without government aid, and cash subsidies are ending as the country wrestles with one of the biggest budget deficits in the Middle East. Production probably will tumble 35 percent in the next season to the lowest on record, the U.S. Department of Agriculture said.

“The quality characteristics are unique,” said Andrei Guitchounts, director of trade analysis at the International Cotton Advisory Committee in Washington. “If they lose this production, I don’t think any other producer can replicate it.”

WHO unit finds 2,4-D herbicide 'possibly' causes cancer in humans

A widely used farm chemical that is a key ingredient in a new herbicide developed by Dow AgroSciences "possibly" causes cancer in humans, a World Health Organization research unit has determined.

The classification of the weed killer, 2,4-dichlorophenoxyacetic acid, known as 2,4-D, was made by the WHO's International Agency for Research on Cancer (IARC).

The IARC said it reviewed the latest scientific literature and decided to classify 2,4-D as "possibly carcinogenic to humans." That is a step below the more definitive "probably carcinogenic" category but two steps above the "probably not carcinogenic" category.

IARC's findings on 2,4-D have been awaited by environmental and consumer groups that are lobbying U.S. regulators to tightly restrict its use, as well as by farm groups and others that defend 2,4-D as an important agent in food production that does not need more restrictions.

Since its introduction in 1945, 2,4-D has been widely used to control weeds in agriculture, forestry, and urban and residential settings.

In March, IARC said it had found another popular herbicide -glyphosate - was "probably carcinogenic to humans." Glyphosate, the world's most widely used weed killer, is the key ingredient in Monsanto Co's Roundup herbicide and other products.

IARC classifications do not carry regulatory requirements but can influence regulators, lawmakers and the public. Following the glyphosate classification, some companies and government officials moved to limit glyphosate use.

Dow AgroSciences, a unit of Dow Chemical Co, has had a particular interest in IARC's review. The company is using both glyphosate and 2,4-D in a herbicide it calls Enlist Duo that received U.S. approval last year. Enlist Duo is designed to be used with genetically engineered, herbicide-tolerant crops developed by Dow.

Dow said in a statement that IARC's classification was flawed and was "inconsistent with government findings in nearly 100 countries" that have affirmed the safety of 2,4-D when used as labeled.

ICL to supply India with 835,000 tonnes of potash

Israel's ICL has signed several contracts to supply its Indian customers with a total of 835,000 tonnes of potash.

The world's sixth largest potash producer said on Friday that the new contracts, which are $10 per tonne above previous contracts, "demonstrate the strong relationships that ICL has developed with its customers in India who elected to wait until the conclusion of ICL’s recent strike to negotiate the contracts with ICL Fertilizers."

The strike in Israel involving around 2,000 employees lasted four months. The workers returned to their jobs at the end of May, averting mass layoffs at three Dead Sea-area factories.

Commenting on the news, Nissim Adar, president & CEO of ICL Fertilizers, said, "The new contracts that we have signed with our customers in India confirm our leading position in the strategic Indian market, whose potential for rapid growth is expected to be a leading driver of worldwide potash demand for years to come as a result of the rise in India’s standard of living, among other factors, which is transforming eating habits and driving the need to provide sufficient quantities of food for a large population that will only continue to grow in the future."

ICL says it is active in India through its ‘Potash for Life’ farmer training program and promotion of potash consumption. The program, launched in October 2013, is designed to unlock the potential of agriculture in India by promoting balanced fertilization among India’s farmers to increase agricultural productivity and economic benefits, as well as to contribute to the creation of sustainable food production in India.

Precious Metals

Uncertain future for global diamond trade as profits vanish

The family businesses that make up the global diamond trade have seen their profits wiped out over the past five years, hit by shaky financing, increased costs and uncertain demand from customers who prefer hi-tech gadgets to bling.

Manufacturers who cut and polish diamonds have found themselves caught between giant mining companies charging high prices for rough stones, and big retail chains that demand gems at low margins to keep sales moving.

While the $80 billion overall spent on diamond jewellery last year was a record, the manufacturers are expected to share a profit of just $100 million in 2015. That is half last year's total and down from $900 million in 2010, according to Chaim Even-Zohar of Tacy Ltd and Pranay Narvekar of Pharos Beam in Mumbai, two of the industry's top consultants.

Even-Zohar estimated that 300,000 Chinese and Indian workers had been laid off out of nearly 1 million employed in gemcutting in those two countries, where most manufacturing takes place.

"The rule of supply and demand doesn't necessarily apply to the diamond sector," said Yoram Dvash, a high-end polisher in Israel who outsources his rough stones to smaller Israeli polishers.

Over the past year he has been sending his subcontractors 20 percent less volume.

"Manufacturing is not just work, it's out of love - taking the rough stones, with all their odd shapes, and bringing out the most precious thing in the world. But this love costs a lot of money. And rough prices have been going up and up with no connection to demand."

In the longer term, the industry needs to sustain consumer demand at a time when the prized possession of many people with disposable income is more likely to be a smartphone than a piece of jewellery. The hottest wristwatch this year does not have diamonds on its face - it has an Apple touch screen.

"Have you ever heard of a 20-year-old standing outside a store all night to buy jewellery?" Ernest Blom, president of the World Federation of Diamond Bourses, asked delegates at an industry conference at a Tel Aviv luxury hotel.

"I haven't," he answered. "We have fallen behind the times."

Last month, the leading mining companies formed a Diamond Producers Association with a focus on stimulating consumer demand. But its annual budget is just $6 million, which many delegates at the conference said was not enough.

The manufacturers and dealers depend on just a handful of miners, which control most of the world's diamond production and say they have had no choice but to pass on high costs further down the supply chain.

No major deposits have been discovered in about two decades. The miners say they are investing heavily to keep supplies coming.

Production in 2013 was down 26 percent since 2005, although estimates suggest it has risen slightly since.

Base Metals

Altona Mining : Sign Landmark Agreement with Sichuan Railway Invest.

Altona Mining Ltd has announced a deal with construction group Sichuan Railway Investment Group which will see the Chinese state-owned enterprise contribute US$214 million in cash to fund the Cloncurry Copper Project in to production.

Under the newly signed framework agreement, Altona and SRIG will - subject to approvals and confirmatory due diligence - form a joint venture over the Cloncurry Copper Project, with SRIG contributing US$214 million to earn its 60% ownership. Altona will hold the remaining 40% and has to contribute only US$38 million, which the company can immediately fund through its cash balance of $47 million, the result of selling its Finnish Outokumpu operations for US$95 million in July 2014.

Altona's core asset is the Cloncurry Copper Project near Mt Isa in Queensland and is one of Australia's largest undeveloped copper projects with a resource containing 1.52 million tonnes of copper and 0.38 million ounces of gold. The first development envisaged is the 7 million tonnes per annum Little Eva open pit copper-gold mine and concentrator. Little Eva’s proposed annual production is 38,800 tonnes of copper and 17,000 ounces of gold for a minimum of 11 years.

Canada's Teck Resources Ltd said it will suspend copper cathode production at its Quebrada Blanca operations in northern Chile after unexpected ground movement was observed near its plant on Thursday.

The duration of the production interruption and impact on production are unknown, the base metals miner said. Teck said its preliminary investigation into the cause of the movement is expected to take at least one week.

Mine operations not affected by the plant are continuing, said the company.

Guinea and its state miner have signed infrastructure sharing agreements with two of the country's leading mining companies in an effort to accelerate development of large-scale bauxite projects, a government official and one of the companies said.

The accords, hammered out during negotiations in Paris, detail how key infrastructure, including a railway and port in the northwestern Boké region, will be shared.

They involve state-owned Compagnie des Bauxites de Guinée (CBG), a local unit of Russia's Rusal, known as COBAD, and GAC, owned by Emirates Global Aluminium (EGA).

CBG is both the concessionaire and a user of the infrastructure which is managed by the state mining infrastructure agency, ANAIM.

Rusal, the world's largest aluminium producer, launched the Dian-Dian bauxite project last year. Bauxite is used to produce alumina, which is used for aluminium production.

Dian-Dian is the world's largest bauxite deposit with reserves of 564 million tonnes, according to Rusal.

The company plans to invest $220 million in the first stage of the project, which foresees the construction of a mine with an annual capacity of 3 million tonnes by 2016 with the potential for an increase of up to 6 million tonnes.

"We are happy that we have come to a mutual understanding with our partners and signed a multilateral agreement to use the existing railway infrastructure of the Boké province together," Rusal's Chief Executive Vladislav Soloviev said in a statement.

In addition to the railway agreement, Emirates Global Aluminium's GAC signed accords related to the use of the port of Kamsar and the conception, financing and construction of a new ore terminal there, Nimaga said.

The GAC project's first phase, including construction of the mine at Sangaredi in the Boké region, is expected to cost Emirate's Global Aluminium around $1 billion.

Zambia tells Vedanta unit to delay processing Chilean copper

Zambia has asked Vedanta Resources' Konkola Copper Mines (KCM) to delay the processing of copper concentrate it imported from Chile until it puts in place safety measures to avoid pollution, Zambia's deputy minister of mines said on Thursday.

KCM said on June 3 it had imported its first semi-processed copper from Chile to ensure its Nchanga smelter operates at full capacity.

Deputy minister Richard Musukwa said the government had asked KCM not to start processing the Chilean copper concentrates because they had high levels of arsenic, a toxic substance.

Musukwa told parliament the level of arsenic in copper concentrates mined in Zambia was 1 percent but the material imported from Chile had a level of around 4 percent.

"When we noticed that these concentrates from Chile had 4 percent arsenic, we instructed KCM not to proceed with the processing until appropriate safety measures are taken," he said.

KCM bought 5,000 tonnes of copper concentrates from Chilean state-run firm Codelco and will smelt the semi-processed material at the Nchanga smelter, which has an annual production capacity of 311,000 tonnes. [IDn:L5N0YP0RG]

Musukwa said KCM resorted to imports of copper concentrates because its Nchanga smelter was operating at only about half its capacity.

KCM has been blending its concentrates with those from other local mines and the Democratic Republic of Congo but these have not been enough to reach the Nchanga smelter's capacity.

Copper production in Zambia, Africa's second-largest producer of the metal, dropped to 708,000 tonnes in 2014 from 760,000 tonnes in 2013.

BC issues permit for new gold, copper mine south of Dease Lake

Image Source: VancouverThe Vancouver Sun reported that BC has issued permit for new gold, copper mine south of Dease Lake. The Red Chris copper-gold mine in northwestern B.C. is one of the few mine projects to progress to construction in recent years. The provincial government has issued a permit for another gold and copper mine to open south of Dease Lake in the Northern Interior of B.C.

Red Chris Gold and Copper Mine, located on 660 hectares on the Todagin Plateau between Ealue and Kluea Lakes will employ 350 workers

The Ministry of Energy and Mines says the permit makes the Red Chris mine the sixth new mine to open in BC since 2011.

In April, the Tahltan Central Council members voted to accept a co-management agreement with Imperial Metals and Red Chris Mine. The agreement gives the Tahltan oversight of environmental issues surrounding the mine, according to the government.

The province says the tailings storage facility at Red Chris Mine has undergone three independent reviews to assess seepage and design considerations.

Copper and gold from the mine will be transported to the Port of Stewart where it will be shipped to overseas markets.

The province did not provide a date for when it will open, but said Friday it will be operational soon.

Chile's Collahuasi workers say won't back down in mining dispute

Workers at Chile's massive Collahuasi copper mine on Tuesday said they would not back down in a conflict with employers and urged miners elsewhere to stage a national strike.

The principal union at the Collahuasi mine, owned jointly by Glencore Plc and Anglo American Plc, described the firing of 31 striking workers eight days ago as "disproportionate," and vowed to continue agitating until an agreement was reached.

The company said the 24-hour strike on June 15, which workers used to demand better working conditions, was an illegal breach of the collective labor contract that is valid until 2017.

"We are keeping our stance of using dialogue to resolve differences with workers...we are not going to accept illegal mechanisms of applying pressure," it said in a statement on Tuesday.

Among the union's demands are improved transport and more generous lunch schedules, roughly in line with concessions supervisors reached with employers in recent negotiations.

"We will not quit, and we will continue to mobilize until a final agreement is reached," the union said in a statement.

The union urged "miners that are staff and contractors, at private and state-ownedcompanies, to mobilize and move towards a national mining strike."

The union has received the support of the Mining Federation, a union umbrella organization in the top copper exporter.

The Collahuasi mine, located in northern Chile, employs over 2,500 workers. Last year, the mine produced 470,400 tonnes of copper, or 8 percent of Chile's total output.

Base metals project developer Royal Nickel Corporation (RNC) has appointed Swedbank Norway (Swedbank) as adviser for a senior bond financing of about $600-million, with a five-year maturity, for its Dumont nickel project, in the Abitibi region of Quebec.

Swedbank would work closely with RNC to arrange the senior project bond finance facility and support RNC’s efforts to secure the further equity and other capital required to complete the financing in international markets.

"With the receipt of the main environmental permit expected before the end of this month, we are now focusing on the final task of raising sufficient financing to begin construction of Dumont, which is expected to be one of Canada's largest base metals mines,” RNC president and CEO Mark Selby said.

Swedbank and the company were planning to complete both the cornerstone financing and the rest of the capital required to allow construction to start at Dumont by early 2016. “Dumont will be well-positioned to take advantage of the significant improvements expected in the nickel markets through the balance of this decade,” Selby said.

The project was expected to cost $1.2-billion to develop, but could attract the attention of mining majors looking to replace dwindling resources. Last month, Australian diversified miner Sirius Resources announced that Independence Group would acquire its Nova Bollinger mine for $1.4-billion – a projecrt pale in comparison with Dumont.

When in production, Dumont would rank as the fifth-largest nickel sulphide operation in the world by yearly output 33 000 t/y in the first phase, and 54 000 t/y when the second-phase expansion had been completed. Only the mining operations at Norilsk (Russia), Jinchuan (China), Sudbury (Ontario, Canada), Voisey’s Bay (Newfoundland and Labrador, Canada) would be larger.

Chile environmental regulator eyes sanctions for Teck copper mine

Canada's Teck Resources is facing sanctions that could include revoking its permit over environmental infractions at its Carmen de Andacollo copper mine in Chile, the local regulator said on Monday.

Problems at the mine, located in the north-central region of Coquimbo, included openings in the deposit where the ore was stored and a failure to build sufficient water infrastructure, the regulator said in a statement. Some of the charges were classified as "serious," which carries a maximum penalty of a $4-million fine or the withdrawal of the project's environmental permit.

Teck is reviewing the regulator's notice and will respond "appropriately," a spokesperson said in an emailled response to questions from Reuters. "We take this issue very seriously and will work to address any concerns identified," Teck spokesperson Chris Stannell said.

Carmen de Andacollo is one of Teck's five copper mines, and contributed nearly 6% of the miner's total 2014 revenue. The announcement of the sanctions process comes at a time when many miners operating in Chile, the world's top copper exporter, are trying to accommodate community concerns, against a backdrop of increased activism and a tougher stance on environmental damage by courts and government.

Teck has ten days to present its plan to address the issues or 15 days to provide evidence.

Barrick copper mine sale draws bid from BHP

BHP Billiton Ltd. and Teck Resources Ltd. are among companies entering the final round of bidding to buy a stake in Barrick Gold Corp.’s Zaldivar copper mine in Chile, people familiar with the matter said.

China’s Zijin Mining Group Co. is in the race for the asset, which is expected to be valued at at least $2 billion, the people said, asking not to be identified as the information is private. Barrick is seeking a buyer for 50 percent of the mine, while some of the suitors are interested in buying the whole asset, two people said. A final decision on the winner is likely to be reached in July, they said.

Rio Tinto, Savannah to Set Up Mozambique Heavy-Sands Venture

Rio Tinto Group and Savannah Resources Plc will combine their heavy mineral-sands prospects in Mozambique to create a “world-class” area for the titanium, ilmenite, and zircon-bearing ore deposits in the country.

Rio Tinto International Holdings and Savannah’s AME East Africa will combine their adjacent Mutamba, Dongane and Jangamo prospects in Inhambane province, as well as Rio’s Chilubane heavy mineral-sands occurrences in Gaza province in an unincorporated joint venture, London-based Savannah said in a statement on its website Monday. Rio will buy all the heavy mineral concentrate produced from any mine that may be developed in the project area, it said.

This combines Savannah’s inferred mineral resource of 65 million metric tons at 4.2 percent total heavy minerals and Rio’s exploration target of 7 billion to 12 billion tons at grades ranging from 3 percent to 4.5 percent, it said. Savannah will operate the venture and may earn an interest of as much as 51 percent in the combined Mutamba-Jangamo project, while Rio

Mozambique’s Mineral Resources and Energy Ministry has yet to approve the formation.

Heavy mineral sands include titanium, a lightweight metal used in the aerospace, oil and gas industries. They also encompass ilmenite and rutile, used in steelmaking, as well as zircon, which can be used in television and computer screens.

Southern Copper will likely have to extend pause on Peru project -gov't

Peru's energy and mines minister said on Friday that Southern Copper Corp will likely extend its 60-day "pause" of its $1.4 billion Tia Maria project past mid-July in order to keep building local support.

"I think the company has known for some time that it will have to do so," Rosa Maria Ortiz said in an interview.

Southern Copper, controlled by Grupo Mexico, announced the formal suspension of its already-stalled project on May 15 to quell deadly protests against it.

But Ortiz said she thinks the proposed copper mine might get started in a year if the company and government work closely with communities to clear up concerns over environmental impacts.

"The company is doing work on communicating with communities that, from my point of view, it should have done long ago," Ortiz said. "I think that helps and is going to clear up a series of doubts."

Ortiz said that Tia Maria is not another Conga - the $4.8 billion gold and copper project proposed by Newmont Mining Corp that has been on hold indefinitely since 2011 because of local opposition.

"Conga is on stand-by. Tia Maria is still in a process in which dialogue can be opened," Ortiz said. "Conga meant replacing lakes with reservoirs...the impact is much greater. With Tia Maria, not a liter of water from the valley basin will be touched."

After deadly protests against Tia Maria in 2011, Southern Copper revised its environmental plan to include a desalinization plant. But renewed rallies calling for the project's cancellation broke out in March as a construction permit for the project was pending.

Ortiz said that despite the Conga and Tia Maria conflicts, plenty of mining projects in Peru face no opposition from communities and roll out as scheduled.

Next year, copper output in Peru is forecast to jump 66 percent to 2.58 million tonnes as two new mines owned by Chinese companies ramp up production, Ortiz said. Gold production, which dropped 10 percent last year, will rise 8 percent in 2016.

China copper smelter faces new risk over restructuring

China copper smelter faces new risk over restructuring

A majority shareholder in a $1.9 billion Chinese copper smelter being built in the port city of Lianyungang faces the risk of a court-ordered restructuring or bankruptcy, marking a new threat to a project still awaiting environmental approval.

The smelter, which is due to have a capacity of 800,000 tonne a year, or more than 10 percent of China's copper smelting capacity in 2015, is being built by Jiangsu Universal Copper.

The firm is majority owned by Jiangsu Tiandilong Group Co Ltd with the remainder held by firms in Hong Kong and Malaysia.

Work on the smelter has proceeded slowly over the past two years and, as well as the financing it still requires, an environmental assessment report had not yet been approved, said a source with direct knowledge of the Jiangsu Universal Copper operation.

Jiangsu Tiandilong is a producer of copper rods and power cables in Yixing city in Jiangsu province and also has property and solar investments, according to the company's website.

A judge at a court in Yixing confirmed by telephone that it had accepted a filing by a branch of Bank of China in Yixing seeking a bankruptcy restructuring of Jiangsu Tiandilong.

According to a lawyer, a company in this situation typically submits a restructuring proposal to the court, which then decides whether the proposal is accepted or the company has to go into bankruptcy.

A restructuring of Jiangsu Tiandilong would not have a big impact on the domestic copper market, since there was already over capacity, said Yang Changhua, a senior analyst at state-backed research firm Antaike.

Jiangsu Tiandilong produces copper rods, made from refined metal and used to manufacture power cables.

According to Yang, it had halted production at its rods plant, which has less than 200,000 tonnes of annual capacity.

Traders in Shanghai said the firm had been reducing buying of refined copper since last year.

Attached Files

Steel, Iron Ore and Coal

Indonesian steel industry demands levies on imports

The Jakarta Post reported that Indonesian iron and steel processing companies have called on the government to provide comprehensive protection for the entire domestic steel industry as the existing and planned regulations protect only the upstream sector. Indonesian Iron and Steel Industry Association (IISIA) executive director Mr Hidayat Triseputro said that the government’s recent plan to increase steel import duties under the Most Favored Nations (MFN) clause is seen as lacking protection for the downstream industry

He said “We are proposing that the government harmonizes its protection simultaneously from the upstream to the downstream steel industry, because the downstream side is hampered by unfair trading and massive imports.”

According to his business group’s review, Indonesia should follow the example of iron and steel associations in other countries and regions, such as the US, Europe, Turkey and South America, which have issued petitions against China’s alleged unfair trade policy.

He said “At the ASEAN level, there is an understanding that we need to issue a petition that there is unfair trade conducted by our partner in a free-trade agreement [FTA]. The process will take a quite long time, so we need to improve our own regulations.”

The MFN steel tariff policy is expected to be imposed in the second half of this year in an effort to respond to the influx of imported steel, leading to a decline in local steel production of between 30 and 40 percent.

The MFN steel tariffs are expected to run alongside the implementation of a steel import duty hike, which was announced in May, to between 15 percent and 40 percent, up from between 0 percent and 5 percent at present.

Bill to strengthen trade enforcement for US steel industry headed to the president's desk

On Thursday, the US House of Representatives passed legislation that includes the Leveling the Playing Field Act, a bill introduced by US Senators Rob Portman (R-Ohio) and Sherrod Brown (D-Ohio) that will give US companies – like the steel industry – new tools to fight against unfair trade practices. Now the bill is headed to President Obama’s desk to become law.

Australian Q3 semi-soft coal settled at $74/t

Mining companies Glencore and Rio Tinto have settled the Australian semi-soft coking coal contract price with Nippon Steel & Sumitomo Metal Corporation at $74/t FOB for July-September loading, $7 lower than in Q2 2015, according to market sources on June 24.

The transaction is likely to be adhered to by other steelmakers in the Asia-Pacific region.

The 9% quarter-on-quarter price decline is smaller than the 15% drop seen for Q3 premium hard coking coal, which was set at $93/t FOB Australia last week.

For the third quarter, semi-soft accounts for 80% of the premium hard coking coal price, up from 74% in Q2.

The long-term contract settlement is also a few dollars above spot clearing prices into China, which were assessed on June 23 at $79.25/t CFR China, equating to a Panamax netback calculation of $70.55/t FOB Australia.

One market source indicated that it was surprising to see semi-soft prices reaching lower than the alleged PCI settlements of $72/t and $73/t FOB since historically it has been the opposite.

The source said that this quarterly price structure was mirroring that of the spot market where semi-soft has outpaced PCI.

Blackhawk Mining enters purchase agreement with Patriot Coal

Patriot first announced its intent to sell the majority of its assets to Blackhawk on June 2, shortly after filing for bankruptcy with the U.S. Bankruptcy Court for the Eastern District of Virginia in May.

The Court approved bidding procedures for the sale of Patriot assets June 23, and named Blackhawk as the stalking horse bidder for the previously identified assets.

“A number of” Patriot's active operations and reserve areas at its Panther, Rocklick, Wells, Kanawha Eagle, Paint Creek and Midland Trail mining complexes, all located in southern West Virginia, are included in the purchase agreement.

Under the agreement, Blackhawk would issue to Patriot's secured lenders new debt securities plus Class B Units providing an ownership stake in Blackhawk.

Mr Nick Glancy, Blackhawk president, said that “After weeks of robust discussion with Patriot and its stakeholders, we are pleased to complete this next step of the process. We are excited about the opportunity to combine Blackhawk's diversified portfolio of operations with Patriot's position as a leading supplier of premium metallurgical coals. We will continue to work diligently to complete the transaction by late September or early October.”

Japan to stop inefficient coal-fired power plants being built

Japan plans to stop power firms building coal-fuelled plants that are inefficient and dirty as it manages the competing demands of cutting greenhouse gas emissions while stepping up use of the fuel after the Fukushima disaster, officials said.

The government has come under fierce criticism from environmentalists and more subtle pressure from allies over its support for coal, the use of which has surged to record levels after the shutdown of reactors.

The government aims to have coal account for 26 percent of the electricity mix by 2030. After Fukushima it went up to nearly a third, against 24 percent before the meltdowns.

"The energy mix is based on the assumption that the average fuel-efficiency of coal-fired plants across the country will be equivalent to the level of ultra-super-critical plants, the most efficient," said an official at the Ministry of Economy, Trade and Industry (METI).

"To make it happen, we must tighten up the regulations," he said, declining to be named as an official announcement has not been made.

Ultra-super-critical plants get the most energy from coal, although more efficient technologies are emerging.

The government is opening up the $65 billion retail electricity market to full competition from next April. That has added to a surge in investment in coal, seen as one of the cheapest fuels, with plans to build about 40 more coal stations in the next decade.

Japan's coal-fired plants have total capacity of around 46 gigawatts. About half of them are old and relatively inefficient, according to the ministry.

"We want to ensure highly efficient technology is put in place in all new coal-fired plants including small ones, which tend to be less efficient than large ones," the official said.

Japan also plans to adopt more advanced technologies such as integrated gasification combined cycle, which can cut emissions by 20 percent, and bring them into commercial operation by 2020, said METI's deputy director, Yuichi Takagi.

"This is in line with our energy mix and climate goals," Takagi said. Japan aims to cut CO2 emissions by 26 percent from 2013 levels by 2030.

The environment ministry recently pushed back on the growing use of coal to generate power by submitting a rare objection to plans for a new 1.2 gigawatt coal-fired plant.

China's coking coal imports in May plunged 68% year on year to 1.88 million mt -- the lowest since March 2009 -- as volumes from Australia and Mongolia plummeted, according to data released late Wednesday by the General Administration of Customs.

May imports were nearly half of April's 3.75 million mt.

Imports from top supplier Australia fell 67% year on year and fell 43% from April to 970,000 mt in May.

Coking coal imports from Mongolia, China's second-largest supplier, fell 66% year on year and fell 59% from April to 534,206 mt in May.

Russian imports were 274,354 mt in May, down 48% from a year ago but up 20% from April.

Shenhua to build mega coal-fired power plant in Sichuan

State-owned coal giant Shenhua Group would build two 1GW ultra-supercritical coal-fired power units in Jiangyou City in northern Sichuan province, local media reported on June 23.

The project, together with a 500,000-tonne coal emergency storage base, is the first phase project Shenhua planned to develop in the southwestern hydro-rich province.

The project was approved by the National Energy Administration in October 2014. Total investment was estimated at 6.92 billion yuan ($1.13 billion). Environmental protection equipment for efficient electrostatic dust removal, desulfurization and denitration will be installed, the report said.

The two generating units may need to burn 4.09 million tonnes of coal, and are expected to generate and sell 10 TWh of electricity each year.

The Shenhua project is part of the 8 GW Lukou coal-electricity base -- one of the four bases planned to be built by the provincial government during the 12th Five-Year Plan period (2011-2015).

Sichuan’s thermal power has been greatly squeezed by its rich hydropower. By end-2014, Sichuan’s hydropower installed capacity reached 62.93 GW, accounting for 79.9% of the total power generation capacity.

The province aimed to realize 88 GW of power generation capacity by end-2015, with 70 GW hydropower and 18 GW thermal power capacities, respectively.

Vale expects to raise $1.5 bln from asset sale in Brazil

Brazilian miner Vale SA could raise about $1.5 billion through the sale of a stake in one of its Brazil-based assets, a senior executive said on Wednesday.

Vale, the world's largest producer of iron ore, is scrambling to raise cash to shore up its finances in the midst of a price slump in the raw material. The transaction could be completed by the third quarter, Rogério Nogueira, head of investor relations, said at an event in São Paulo.

Nogueira also said Vale was considering selling between 25 percent and 30 percent of its base metals division in an initial public offering. The figure is a reduction from the 30 percent to 40 percent the miner said in December it was considering selling.

Vale has said it will take a decision on whether to go ahead with the IPO at the end of the year, but that approving the move is dependent on a recovery in nickel prices. Such a recovery has remained illusive with nickel down 30 percent in the last year to $12,760 a tonne.

Chief Financial Officer Luciano Siani told Reuters in December the IPO would only go ahead with a nickel price above $20,000 a tonne.

After a halving of the iron ore price since last year and high capital expenditure as it builds a massive new iron ore mine in the Amazon, Vale has a funding shortfall for this year and next. The miner has said it does not plan to increase its debt level and will raise the cash through asset sales.

Nogueira declined to elaborate on the type of asset in Brazil that could be sold. More likely assets are fertilizers, where Vale has said it is looking for a partner, and rail and port logistics, which banking sources have said are a good sale option.

At the same event Nogueira said Vale was working to cut its level of investment, with the company's current forecast between $8 billion and $9 billion for 2015.

That range is a possible reduction from a presentation published earlier this month, when Vale said it expected to invest $9 billion this year. It is also down from the $10.2 billion forecast given in December 2014. Much of that reduction has come from a weaker Brazilian real.

China key steel mills daily output up 2.1pct in early-Jun

Daily crude steel output of key Chinese steel producers increased 2.08% from ten days ago to 1.803 million tonnes over June 1-10, showed data from the China Iron and Steel Association (CISA).

The CISA didn’t publish China’s total daily output during the same period.

As of June 10, total stocks in key steel mills stood at 16.31 million tonnes, up 3.03% from ten days ago.

During June 1-10, prices of the six major steel products all posted declines from the previous ten days, with rebar prices averaging 2,272 yuan/t, down 2% from ten days ago, showed data from the Ministry of Commerce.

China’s steel market was still struggling with falling prices and weak demand in the traditional slack season; the oversupplied situation may hard to change in the short run.

Coal railings to Newcastle port terminals down 10.6pct on week - HVCC

According to the Hunter Valley Coal Chain Coordinator’s weekly report, coal volumes railed to Newcastle’s Port Waratah Coal Services and Newcastle Coal Infrastructure Group terminals in New South Wales, Australia during the week ended Sunday fell 10.6% on the week to 3.05 million tonne.

The weekly volume did not reach the expected inbound railings volume of 3.26 million tonne.

For the week to Sunday, PWCS’ throughput was 2.51 million tonne, climbing 35.3% on the week and also surpassing the target of 2.25 million tonne.

Stocks at the PWCS terminal fell 11.3% on the week to 2.04 million tonne, although the same data was not available for the NCIG terminal.

According to the HVCCC, the PWCS terminals’ vessel queue remained steady on the week at 16 on Sunday.

The coordinator said that, based on terminal demand, the vessel queue at PWCS was estimated to be 15 at the end of June and 13 at the end of July, compared to the previous week’s estimate of 12 at the end of June and 13 at the end of July.

HVCC said in its report that producers forecast coal arrivals for June at 8.4 million mt, unchanged on the week, with July’s volume expected to be 10.1 million mt and August’s projection at 9.2 million tonne.

Westmoreland board approves San Juan mine purchase

Argus reported that Westmoreland Coal's board has approved the company's proposal to buy the San Juan mine from BHP Billiton and enter into a new long-term coal supply agreement with the owners of the San Juan generating station.

The plan is still subject to approval by the New Mexico Public Regulation Commission. Westmoreland plans to meet the commission's 1 July deadline for filing its binding coal supply agreement with Public Service of New Mexico and other owners of the San Juan plant.

The acquisition is expected to close on 31 December and includes the possibility of the mine, in Farmington, New Mexico, supplying the plant through 30 June 2022. BHP has an agreement to supply the plant until the end of 2017.

Regulators will also determine the future of the mine. The majority owner of the San Juan generating station, Public Service of New Mexico (PNM), plans to retire units 2 and 3 of the plant by the end of 2017 to comply with New Mexico's plan for regional haze. PNM owns 418MW of those two units and another 385MW elsewhere at the plant, including 195MW of unit 4. The generator wants to replace the lost power by buying an additional 132MW of San Juan unit 4.

Meanwhile, the Public Regulation Commission will decide on the generator's request to raise rates to pay for replacement power at San Juan sometime this year. Several cities including Albuquerque and Santa Fe as well as environmental groups have raised opposition to the plan.

China's imported iron ore prices fall

Prices of imported iron ore at 33 major Chinese ports fell last week due to weak demand, a report showed on Tuesday.For the week ending June 22, the price index for imported iron ore of 62-percent purity dropped four points from the previous week to 61. The index for iron ore of 58-percent purity fell four points to 55, according to the Xinhua-China Iron Ore Index.

Inventories of imported iron ore stood at 78.83 million tonnes, down 1.41 million tonnes, or 1.56 percent, from the previous period (June 9 to 15).

The report said the slide in steel prices will continue to weigh on prices of imported iron ore.

China produced less steel in the first quarter of 2015 as demand shrank amid a slowing economy and government moves to overhaul the saturated sector, official data showed.

The index tracks changes in the domestic iron ore market on the basis of surveys of major sea ports, iron ore traders, steel makers and customs statistics.

China ore sales buoy Atlas Iron

Atlas Iron is confident of operating through another iron ore price rout after locking in forward sales above its break-even costs.

Chief executive David Flanagan says the company will still be comfortable if the iron ore price falls back to 10 year lows of $US46 a tonne.

"Today we're selling ore and we're making money so all of the cargoes right through to June, July, August that we've sold - we're making cash on all of them," Mr Flanagan told reporters on the sidelines of a mining conference in Perth on Wednesday.

Mr Flanagan said the struggling junior iron ore miner had locked in some cargoes of iron ore to China as far forward as December at $US57 per tonne, comfortably above the company's break-even price of $US50 per tonne.

"If the iron ore price goes to $US46 a tonne and it stays there for two months it won't affect the cash flow in our business because we will have pre-sold iron ore for at least the next three months."

Mr Flanagan predicts the iron ore price, which is trading around $US60 a tonne, will move between $US50 to $US70 per tonne over the next two years, despite analysts' predictions that it could drop as low as $US38 per tonne in the months ahead.

The company has $340 million of debt with US bond holders which is due in December 2017, with interest costs of between $2.5 million to $2.8 million per month.

Shareholders will vote on a $180 million capital raising at Atlas' annual general meeting in Perth on Thursday before Mr Flanagan embarks on an international roadshow to Hong Kong, Singapore, London, Edinburgh, Australia and New Zealand during July.

The company plans to restructure its debt after the capital raising and has recently been in talks with its four lenders.

Mr Flanagan said if the $180 million capital raising was successful, the business could potential raise another $270 million if options are taken up by some of the company's 34,000 shareholders.

Chinese steel mills cut their export prices further this week

If the latest numbers are to be belived, Chinese steel mills have stepped up their assault on overseas market with cheaper export offers this week by cutting plate prices further by USD 25, after dropping their prices substantially in Week 25 which resulted in severe price correction in European domestic steel market.

While their aggresivness seems to be a result of securing volumes, it is causing serious trouble to steel mills in most countries and we need to wait to see the bottom.

India's Adani Mining has asked its four engineering contractors working on the Carmichael project to halt work around the mine, the Guardian Australia reported, citing people familiar with the matter.

Halting work at this stage of the project made no sense even as a savings measure, and raises speculation that the Indian company might scrap the project altogether, Guardian Australia said. (bit.ly/1K8PyxE)

Adani has signed up buyers for about 70 percent of the 40 million tonnes coal the Carmichael project is due to produce in its first phase, with production expected to begin in late 2017.

Guardian Australia said it is understood that about 40 engineers working for one of Adani's contractors, WorleyParsons, were among those pulled off the project.

Tim Buckley, a director of energy finance studies, Australasia, at the Institute for Energy Economics and Financial Analysis, which opposes new coal developments said halting work at this stage "just crucifies the project", the newspaper reported.

SMEC, one of the contractors hired by Adani, declined to comment.

Adani and its other contractors Aecon, Aurecon and WorleyParsons could not be reached for comment outside regular business hours.

Adani's ambitions in Australia have been uncertain following a surprise election result in Australia's coal-rich Queensland state, leading to a policy reversal, and heightened pressure to protect the Great Barrier Reef.

Caofeidian coal stocks slump on low prices

Coal stocks at Caofeidian, one of northern China’s main coal transfer ports, have dropped greatly since mid-April this year, mainly due to reduced supplies amid low prices and weak demand.

On June 23, Caofeidian port had 3.4 million tonnes of coal in stock, down 3.4% from a week ago and plummeting 59.9% from this year’s highest level of 8.45 million tonnes on February 28. The lowest was recorded a day ago at 3.39 million tonnes.

Data showed that daily coal railings to Caofeidian port averaged 76,875 tonnes in the month ended June 23, down 36.3% on month; while the outbound shipment was 108,750 tonnes each day, falling 47.0% on month.

The decline was largely to decreased coal supply of Inner Mongolia, which is the main coal supplier to the port, as producers suffered a loss due to rather low prices, multiple sources told China Coal Resource.

Meanwhile, the port is facing increased competition from Qinhuangdao port, which has cancelled coal blending fee (1 yuan/t) since May 1, luring small and medium miners who previously sent coal to Caofeidian port.

In 2014, total coal outbound shipment at Caofeidian stood at 75.73 million tonnes, down 3.6% year on year, data showed. That accounted for 11.5% of the total coal shipment at north China ports.

Caofeidian port has been expanding its coal handling capacity vigorously over the past few years. It planned to build 16 coal loading berths, each with handing capacity of 50,000-100,000 tonnes, through two phrases of construction. Total handing capacity of the port is expected to reach 200 million tonnes per annum upon completion by May 2018.

Rio Tinto sees 'a few years of reduced consumption of new steel'

China is still working through built-up iron ore inventories which will dampen metal demand in the short term, says Andrew Harding, chief executive of Rio Tinto's iron ore operations.

Harding made the comments in the company's in-house magazine, Mines to Market, in a question and answer piece.

He was asked about long-term growth, which he argued is good due to population growth and more people entering middle class, but short-term the market is still tough. (Emphasis added.):

The Chinese economy is in transition to what is being called the “new normal” – driven more by domestic consumption than by infrastructure growth. In 2015 to date, China’s steel production has been much the same as last year. There is inventory in the housing sector that has to be run down, and that will lead to a few years of reduced consumption of new steel.

But a year or two where there are short-term effects running shouldn’t sway us from the long-term outlook. The long-term drivers are fundamentally sound and will keep driving consumption forward, but you will have this period of transition.

Harding noted the pattern of boom and bust is not new mining. Capital spending needs time to catch up demand, and it is not easily turned around.

"Since mines take a long time to come on-stream, that supply is still coming on-stream while, in the short term, demand growth is not looking as strong as it was. It’s a common pattern you see in mining, and it’s playing out yet again in iron ore."

Harding says the company is focused on being at the bottom of the cost curve. It's the only place to be. To the rest, his sympathies:

For players at the opposite end of the curve, unless they can cut their costs dramatically, they will go out of business. They’re not profitable in the long term, and definitely not through cyclical lows like we’re seeing now.

I am sympathetic towards the people in these companies who may lose their jobs, and towards the suppliers to these companies that may lose their contracts.

Chinese steel products exports will be high in June - SMM

According to commodity information provider Shanghai Metals Market, China’s seel products exports are likely to remain high in June

The company claims that 30 mainstream building materials factories estimate that their exports will rise by 5% due to sluggish steel prices in China’s domestic marketplace.

In May, China exported 9.2 million tonnes of steel products, up 7.73% month-on-month and 14% up year-on-year. During the first five months of 2015, China exported 43.52 million tonnes of steel products, up 28.2% year-on-year, says NBS.

AK Steel provides second quarter earnings guidance

AK SteelAK Steel has provided guidance for its second quarter 2015 financial results. AK Steel said that it expects to report a net loss of $0.37 to $0.42 per diluted share of common stock for the second quarter of 2015. AK Steel said that the company's expected second quarter results continued to be negatively impacted by lower carbon steel prices due to the continued high level of what the company believes are unfairly traded imports.

Japan crude steel output falls for 9th month in May

Japan's crude steel output fell 7 percent in May from a year earlier, the ninth straight monthly fall, as slack car consumption and slower government spending on public works battered steel demand.

The continued decline is in contrast with recent data which underlined an upbeat mood among Japanese manufacturers and retailers.

In May, steel production slid to 8.92 million tonnes, the Japan Iron and Steel Federation said on Friday.

"Automakers are still making production adjustments due to high inventories. That is affecting steel demand," said a researcher at the federation.

"Behind the weaker steel output was also a drop in public works due to slower budget implementation by the government than a year ago. But that will likely change from July as the budgets are expected to be executed," he said.

The Ministry of Economy, Trade and Industry (METI) said in April that Japan's crude steel output for April-June is forecast to drop 7.8 percent from a year earlier to the lowest for the quarter in six years.

Attached Files

Indonesia Jan-May coal output down nearly 20pct

Indonesia, the world’s top exporter of seaborne thermal coal, produced 166 million tonnes of coal over January-May this year, down 19.4% from the same period last year, said the Ministry of Commerce on June 18, citing Indonesia’s Ministry of Energy and Mineral Resources.

The decline was mainly due to producers’ output cut on the back of falling global coal prices, which has posted a nearly 20% decline since 2014.

Total coal export during the same period was 135 million tonnes, the ministry said.

Low Indonesian thermal coal prices continue to weigh on producers’ margins and some have reduced their offer prices in an attempt to clear stockpiles, said market sources.

Indonesia’s June thermal coal reference price, also known as Harga Batubara Acuan (HBA), was set at an all-time low of $59.59/t, FOB Kalimantan, falling 19.1% from a year ago and down 2.4% from May, said the ministry.

Indonesia may see its coal output drop 24% year on year in 2015, according to Pandu Sjahrir, chairman of the Indonesian Coal Mining Association (ICMA).

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